By Sajeev K Peter

KUWAIT: Currency exchange companies across Kuwait are doing brisk business these days amid a continuous slide in the value of the Indian rupee, prompting Indian residents to send money home at very attractive rates. One Kuwaiti dinar fetched nearly 250 Indian rupees yesterday as the currency traded at more than 75 against the US dollar in forex markets on Friday amid a strengthening US dollar and concerns over the new Omicron coronavirus variant. Rising crude oil prices also contributed to the volatility of the rupee, according to market observers.

"There is an unusual rush at most of our branches as people find the current exchange rate quite attractive," said Mujeeb Ahmad, an employee working at a leading exchange company in Kuwait. Ahmad said that his exchange house finds it hard to handle the unusual rush of customers as there is a staff shortage in the company currently. He admitted this is the case with most exchange companies in Kuwait, as they are grappling with the impact of the pandemic and still reorganizing their businesses.

The rupee has been on a losing streak all this year, primarily due to the strengthening of the dollar and weakening of investor sentiment in India. The Indian currency continued its downward slide against the dollar, dropping as much as 0.2 per cent on Friday. The greenback was at a 16-month high yesterday as investors anticipated a further tightening of the monetary policy in the US.

Although India's central bank (RBI) kept the repo rate unchanged at 4 percent last week, the impact of the decision was short-lived on the forex market in India. Fresh concerns over the Omicron variant has added to the volatility. However, the partially convertible Indian rupee is still higher than its all-time low of 76.87 against the US dollar that it hit in April last year.

"For residents, the weakening of the rupee is a blessing in disguise, as they can send more money to India. Ironically, a weaker Indian currency hurts the economy and fuels inflation in the domestic market," said Raghunathan Iyer, who works at an investment company in Kuwait City. Forex specialists have also observed an increase in high net-worth remittances over the last few months.

"High-value remittances and volumes to India have increased significantly in the last few weeks," said Fareed Abdulsalam, a currency specialist working with an exchange company in Kuwait City. However, many experts are of the view that a depreciation of the Indian rupee doesn't help residents much in low-income categories.

"They are not in a position to take advantage of the favorable forex rates as their incomes remain the same, no matter if the currency rates improve or not," Abdulsalam pointed out. According to currency experts, the rupee will continue to remain under pressure as the dollar is expected to remain bullish in the near term.