ISTANBUL: Tourists from the Gulf queue outside a Louis Vuitton store on Monday. – AFP

KUWAIT/ISTANBUL: Large crowds of expats were seen at many money exchange companies in Kuwait yesterday as the Indian rupee continued its free-fall against major currencies across the world. One Kuwaiti dinar traded at 230.60 Indian rupees yesterday as the rupee touched an all-time low of 70 against the dollar, following a broader weakness in other emerging market currencies prompted by a currency crisis in Turkey.

“It is a good time for Indians to send money home,” said E D Titus of Aman Exchange, who attributed the weaknesses of the Indian currency primarily to the plunge in the crisis-hit lira. “The emerging markets are largely concerned about a possible spillover from lira’s weakness,” he said. The rupee was trading around 64 against the dollar and around 217 against the dinar in Aug-Sept 2017. The currency has lost more than 5 percent of its value over a period of one year.

The rupee continued to trade at record lows yesterday at local currency exchange houses, prompting both wealthy non-resident Indians (NRIs) and people from lower income segments to transfer money to India. “There is a substantial rise in high value remittances to India in the last three days, an indication that expats with high income are taking advantage of the weakness in the rupee,” said Muhammad Aziz, an executive at a local exchange company.

Many market specialists are of the opinion that a sudden plunge in the value of the rupee usually does not help expats in the low-income categories much. “It appears that expats from all walks of life are taking advantage of the record weakness of the rupee. There is not only an increase in the volume of remittances, but the number of transactions as well,” added Aziz.

“However, we are expecting that the rupee will recover, albeit marginally, when the Indian market reopens after the Independence Day holiday,” Titus said. According to reports, the Reserve Bank of India is planning to intervene in the forex market to stem the free-fall of the rupee. “For people like us, it is a blessing in disguise,” said Sheila, a housemaid as she came out of an exchange house in Salhiya after transferring a small sum to her hometown of Panaji.

South Africa, Argentina, Mexico, Brazil and Russia have all seen their currencies slip over the past week because, like Turkey, they remain heavily dependent on foreign capital, especially the dollar. The rupee has been on a downward spiral throughout 2018 after starting the year at 63.67. India is a massive net importer of oil, securing more than two-thirds of its needs from abroad. Brent Crude was up 20 cents at $72.81 per barrel yesterday, well above prices of around $50 at the same time last year.

Analysts say the high crude costs are squeezing the Indian currency, making it less appealing to traders. “Investors are concerned that the rupee has crossed the 70 benchmark today,” said N S Venkatesh, chief executive of the Association of Mutual Funds in India. But he added that he expected the currency to stabilize at around 69, describing India’s economy as “strong”.

“The Reserve Bank of India’s monetary policy has shown concern for the rupee’s fluctuations so investors should not be worried by knee-jerk reactions in the forex market,” Venkatesh said. India’s central bank has raised interest rates twice this year, in part to help increase the value of the rupee. Its fall is leading to a widening of India’s current account deficit, when the value of imports exceeds the value of exports, experts say.

President Recep Tayyip Erdogan yesterday said Turkey would boycott US electronic goods like the iPhone in retaliation for punitive sanctions from Washington, as the Turkish lira finally clawed back some ground after going into a tailspin over the tensions. The dispute between the NATO allies – brought to a new intensity by Turkey’s holding of an American pastor for two years – has raised questions over the future of their partnership and fanned fears of a looming economic crisis in Turkey.

“We will boycott US electronic goods,” Erdogan said in a speech in Ankara, again showing no sign of compromise in the dispute. “If (the United States) have the iPhone, there’s Samsung on the other side,” he said, referring to US giant Apple’s iconic phone and the top South Korean brand. “We (also) have our Venus and Vestel,” he said about homegrown Turkish electronics brands. Shares in Vestel zoomed up seven percent on the Istanbul stock exchange after Erdogan’s remarks.

Erdogan has been repeatedly photographed with Apple products including the iPhone and iPad. He also made his now famous speech on the night of the July 2016 failed coup calling citizens out into the street through FaceTime, an iPhone app. The lira’s plunge – which had been ongoing for weeks – was turned into a rout on Friday when US President Donald Trump tweeted that Washington was doubling aluminium and steel tariffs for Turkey.

Turkish Airlines also announced on Twitter that it would join a campaign circulating on social media with a hashtag #ABDyeReklamVerme (don’t give ads to America). “We, as the Turkish Airlines, stand by our state and our people. Necessary instructions on the issue have been issued to our agencies,” Yahya Ustun, spokesman for the country’s flag-carrier, wrote on Twitter. Erdogan said Turkey was facing an “economic attack” and a “bigger, deeper operation”. “They don’t hesitate to use the economy as a weapon,” he said. “What do you want to do? What do you want to achieve?” he added, referring to the US.

The lira posted gains on forex markets for the first time after days of losses, giving the currency much-needed respite. The lira was at 6.5 to the dollar, a gain of 5.0 percent on the day and 7.4 to the euro, well off the record lows of 7.24 to the dollar and 8.12 to the euro seen Monday. The lira has lost about a fifth of its value against the greenback since Friday. Turkey’s central bank on Monday announced it was ready to take “all necessary measures” to ensure financial stability after the collapse of the lira, promising to provide banks with liquidity. However, the move failed to impress financial markets, which want to see a massive rate hike of as much as 1,000 basis points by Turkey to combat the lira’s weakness and fight inflation.

Treasury and Finance Minister Berat Albayrak, Erdogan’s son-in-law, will speak with about 1,000 foreign investors on Thursday via a teleconference, the private NTV broadcaster said. Albayrak said yesterday Turkey would press ahead with its action plan to prop up the lira against the dollar, calling for a trade that is conducted “in our own currency”. “We will protect our Turkish lira, we will march with Turkish lira and we will see a stronger lira in the coming period.”

A Turkish news agency said traders in Istanbul’s historic Eminonu district converted $100,000 into lira yesterday. Chanting “Damn America”, they unfurled a banner saying “we will win the economic war”, the Demiroren agency said. Amid calls to “burn” the dollars, the group headed to a bank branch where they converted the money, it said.

By Sajeev K Peter and Agencies