Sterling panic-buying? Not in UAE

Dubai - British currency touched record low in over 30 years

There is no panic-buying of the pound sterling in the UAE currency market and there is also no shortage of the currency, major exchange houses have confirmed to Khaleej Times.
The UK's unprecedented decision to leave the European Union sent shockwaves around the world on Friday, hitting financial markets badly. Sterling touched a record low in more than 30 years.
On the UK referendum day, sterling witnessed a record 13 per cent intraday range drop, smashing the 6.5 per cent in October 2008 at the height of the global financial crash and the 4.9 per cent range on Black Wednesday in 1992.
"I don't see any panic in the market for sterling and there is no shortage of the currency," Sudhir Kumar Shetty, president of UAE Exchange, told Khaleej Times. "It's business as usual as the demand goes up for major currencies in summer because people travel during school holidays."
Responding to a question if there is any big boost in remittances to the UK because of the record-low level of sterling after Brexit, he said: "In the UAE, a lot of companies have paid salaries early this week because of coming Eid, so people are sending remittances now."
British expatriates, though, will get around 11 per cent more if they send remittances to the UK, so there is no significant rush.
There is no chance that sterling will see a record-high level of 1.5 soon, so buying the currency for investment purpose is also not advisable at the moment, he added.
On the polling day on June 23, the euro finished at 1.11 (Dh4.125) versus the dollar and the pound closed at 1.37 (Dh5.085) against the greenback. Except for the euro and sterling, major currencies bounced back. It was one of the worst scenarios where almost all majors moved over 300-400 bps and it was a havoc for the pound and euro.
Adeeb Ahamed, CEO of Lulu International Exchange, also confirmed that there is regular demand of sterling due to it being the summer holidays, but do not see any shortage or heavy demand for it as such.
"We do not know how the market will react on Monday, since the international weekend has already begun. We are conducting our business as usual and because the holiday season is coming up, we currently hold sufficient stock of the currency," Ahamed added.
Sudhesh Giriyan, chief operating officer of Xpress Money, said: "We've seen the British pound decline in value to record lows. British expatriates in the UAE and GCC region are taking advantage of the weakening pound, and are remitting money back home at very favourable exchange rates."
Giriyan added: "In the long run, we expect remittances from the Middle East to the UK and Europe to remain healthy. However, intra-Europe remittances, and those coming out of the UK, will depend on economic vibrancy, and the deals made in terms of the free movement of people."
Promoth Manghat, chief executive officer of UAE Exchange, said: "The decision of the people of the UK to leave the EU has turned stock markets highly volatile in various parts of the world. Also, to be noticed is the fall in pound against the dollar to which even the dirham is pegged. This will help in increasing the remittance volume to the UK out of the UAE. However, a weaker pound/euro and a stronger dollar will impact tourism and real estate as the UK and Europe are major sources for both these sectors."
Emirates NBD chief investment officer Gary Dugan said: "Sterling has reacted by falling precipitously to 1.350 with fears that we could see $1.20 before the fallout from the result is fully absorbed in the market. In the delusional trading just before polls closed, sterling traded as high as $1.50. As was expected the euro has followed sterling lower. In the last 24 hours the euro traded as high as 1.1428 to eventually plunge to $1.1162. Fair value for sterling is generally agreed to be around $1.55, however as we know currencies very rarely trade at fair value.
- abdulbasit@khaleejtimes.com

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