In exchange for lesser UAE dirhams, Indian expats will be able to remit more money home at the start of August. The rupee may drop to 22 against Dh1 early next month, according to some forex analysts.

On Monday, the Indian rupee traded at 21.75 against the UAE dirham, and at 79.88 against the US dollar.

According to analysts, the Indian rupee will trade in the range of Rs79.50 to Rs80.50 this week against the US dollar. In the weeks following, the currency is likely to fall to 22 dirhams against the UAE dirham.

The rupee's weakness against the US dollar will automatically reflect in its exchange rate against the dirham, since the dirham is pegged to the dollar.

As red-hot inflation data raised fears of more aggressive policy tightening by the top US central bank, the rupee fell to a record low of 79.96 last week.

At one point, the partially convertible rupee rose to 79.73 per dollar, compared to Friday's close of 79.88. The rupee touched Rs 79.92 for a dollar in early Friday trading.

Latest analysis by India-based broker LKP Securities indicated that the next hurdle for dollar can be seen around $110, which is why the Indian rupee is weak and why the trend continues towards 80.50 as the dollar index traded in a range.

In a recent report, Indian lender Kotak Mahindra Bank reported that the Indian rupee continues to be weighed down by a strong greenback benefiting from safe haven demand and US monetary tightening bias.