Expatriates in India, Pakistan, and the Philippines have sent more money home in August due to a significant drop in the local currencies against the dirham.
The UAE has seen an increase of nearly 10 percent in remittances to India - this represents a significant increase. Remittances to Pakistan have also seen an equal increase (in August) – signifying a growth in the inflow of funds to Pakistan. Remittances to the Philippines, meanwhile, have shown a higher than 10 per cent increase,” a spokesperson from LuLu Exchange told Khaleej Times on Thursday.
According to the spokesperson, now is the best time for expatriates to send money overseas. “The examination of the remittance landscape and economic conditions suggests that current market conditions are conducive to achieving good value for remitters,” he noted.
“It is a favourable decision to send money from the UAE to India, Pakistan, and the Philippines, particularly when considering the remittance trends and economic factors,” he said.
Expected to surge
Indian, Pakistani, and Philippine rupees as well as the Philippine peso are under pressure as US Treasury yields rise and the Chinese yuan weakens.
The Indian rupee (for instance) declined over 1.2 percent from its late-July high to a five-month low (in August) at 83 rupees per dollar - the first time in nearly ten months. A stronger dollar, rising US Treasury yields and a weaker Chinese yuan contributed to the rupee’s descent.”
“Historically, a slump in the rupee relative to the USD and AED is inadvertently followed by a surge in remittances to India by the NRI (overseas Indians/ non-resident Indians) community. This is because a weaker rupee allows NRIs to send more money to India while spending the same amount in their host nations,” Valecha underscored, adding the Indian rupee is likely to remain under pressure in the near-term due to several reasons.
The three Asian currencies are forecast to slide further in the coming weeks, giving expatriates a short-term gain if they hold off on sending remittances.
In contrast, Filipino financial advisor Susan Francisco, based in Dubai, says: "Yes, the rupee and the peso may fall further, but people in our home countries also need money as commodities are becoming more expensive in our local markets. They will have a hard time meeting their expenses if they hold a remittance now.”
According to Francisco, expatriates can benefit from the higher value of dirhams by saving the extra money they would gain as a result. She explained: “Let’s say before you need D3,335 to send P50,00 to your family back home in the Philippines. You now only need Dh3,246 to send the same amount, and you can add almost Dh90 to your savings account."
Exchange rates for 1 UAE dirham at the moment
- Indian Rupees: 22.58
- Pakistani Rupees: 80.20
- Philippine Peso: 15.40