Indian rupee's fall

The rupee slumping to a new low against the dollar this week has been a sudden bonanza for a large number of Indian expatriates waiting to invest back home. Expectations from forex experts suggest a weaker and volatile rupee in the short term, with further slide to levels of Rs55 to a dollar not being ruled out.

Many of the UAE's non-resident Indians (NRI) were taking out personal loans or cash advances through their credit cards to remit money to India as the rupee touched Rs52.54 against the US dollar on Tuesday before noon. That meant an exchange rate of Rs14.30 for a dirham at that time of day.

"To borrow and remit money even at this juncture is not advisable at all," said Krishnan Ramachandran, chief executive, Barjeel Geojit Securities, Dubai. "The borrowing cost will certainly wipe out the gains to a great extent; many a time it will be a losing proposition. The gains, if any, can at best be marginal."

For instance, Ramachandran said, if one were to remit at an exchange rate of Rs52 borrowing at 8.50 per cent per annum, taking into account the interest cost incurred for this, the effective realisation will be Rs49.45 when the loan repayment is over.