The Indian rupee plunged to a new all-time low against the UAE dirham on Thursday, reaching 23.0047. This decline was attributed to several factors – including potential foreign outflows from Indian stocks and a stronger US dollar. The Reserve Bank of India intervened to stabilize the currency preventing further depreciation. The Indian stock market also experienced a downturn, with the Sensex and Nifty 50 indices falling by around 1%.
The currency has been pressured by a stronger Dollar following President Donald Trump’s election and by foreign outflows from local stocks. The Dollar index has climbed from 103.81 at the start of the month to 106.67 currently, witnessing a gain of 2.8% so far this month. President Donald Trump’s policies are expected to be inflationary, reducing the odds of aggressive rate cuts by the Federal Reserve and thus boosting the US treasury yields and the Dollar.
 According to the National Securities Depository Ltd (NSDL) data, FPIs offloaded ₹22,420 crore worth of Indian equities, and the net outflow stood at ₹26,343 crore as of November 15, taking into account debt, hybrid, debt-VRR, and equities. October’s FPI outflow hit a 10-month high, the highest sell-off from the Indian market YTD. Separately, heightened geopolitical risks triggered by the Ukraine-Russia conflict supported the greenback and weighed on the rupee.
“The rupee could continue to remain weak until the selling from FIIs stabilizes. Nonetheless, timely intervention by the Reserve Bank of India helped the currency limit its losses, with traders citing strong dollar offers from state-run banks,” said Vijay Valecha, Chief Investment Officer, Century Financial.
In response to these developments, gold prices surged to a one-week high in the UAE. The current gold prices in the UAE are as follows: 24 Carat at AED319.25, 22 Carat at AED295.50, 21 Carat at AED286.25, and 18 Carat at AED245.25.
Regarding the Indian rupee, Nitin Agarwal, head of treasury at ANZ India, mentioned that a modest decline in the dollar is unlikely to cause a substantial appreciation in the rupee, as the RBI is expected to focus on replenishing its foreign exchange reserves. However, if the dollar index falls by 2-3%, the rupee could see a movement of up to half a percent.
