UAE Dirham-Rupee rate today: INR drops to near one-month vs AED amid weak risk appetite

economictimes.indiatimes.com:

Against the US dollar, the Indian rupee posted its biggest one-day loss in nearly two months. The rupee ended the day at 82.58 against the US dollar, also weighed down by possibly dollar demand from importers.

Higher crude prices, and a sharp fall in Indian equities also weighed on sentiment. Risk appetite in the Asian region was weak today after Credit Rating agency Fitch downgraded USA Sovereign rating from AAA to AA+ citing expected fiscal deterioration over next 3 years, a high and growing general government debt burden.

Analysts, however, did not see a major impact of the downgrade on US Treasuries, which will be a relief for the rupee and other Asian currencies. Currency traders will now be awaiting non-farm US payroll report due this Friday.

CR Forex Advisors also attributed the weakness in Indian rupee to «rising dollar demand as concerns start to brew over the possibility of potential outflows of Russian funds held in rupees with local banks. Amid the Western sanctions that restrict Russia from using the US dollar for trade, India paid in other currencies, including the dirham, yuan, and rupee, which local banks hold in special accounts.

However, since India's imports exceed exports, Russian companies have accumulated billions of rupees. The markets have been worried about the eventual outflows of these funds which could lead to a rise in FX volatility.» However, with a forex pile of over $600 billion, RBI will be able to manage the volatility, says the advisory firm.