Indian expats smile as rupee value declines

DUBAI — The declining value of Indian rupee against the US dollar has brought a sigh of relief for Indian expatriates, especially labourers and low-income workers, in the Gulf region.

By Riyasbabu (Our staff reporter)

Published: Wed 21 May 2008, 9:07 AM

Last updated: Sun 5 Apr 2015, 7:10 PM

Except Kuwait, currencies of the Gulf Cooperation Council (GCC) countries are pegged to the US dollar. The dollar’s slide till recently had expatriates with low incomes reeling under financial difficulties due to the poor exchange rate of GCC currencies against the Indian rupee.

Banking experts say that for the past three weeks, the rupee has been facing immense pressure and its value has declined drastically due to the increase in oil prices.

One dirham fetched Rs11.48 yesterday in the market. A month ago, it was around Rs10.60.

Explaining the reasons for the declining value of the rupee, G.S. Srishailan, chief dealer of foreign exchange, treasury and investment in Abu Dhabi Commercial Bank, said: “There is already a huge oil deficit in the market. The consistent increase in oil prices is putting pressure on the rupee, resulting in its declining value.

Sudheer Kumar Shetty, General Manager of UAE Xchange, said that not only an increase in oil prices but also the trend of importers buying more dollars as the rupee started sliding has caused the decline in the rupee’s value.

“In the past two weeks, we have witnessed an increase in the remittances to India. People who were waiting for the value of the rupee to decline have started sending money home,” he said.

An official at Al Fardan Exchange said that remittances to India have increased in the past two weeks, though marginally.

“After the rupee’s slide, the flow of remittances and the volume of money sent to India have increased,” said an official at the counter.

Meanwhile, Indian workers said the trend is helping them to send more money home, making them feel better.

“A year ago when I sent Dh1000, I got Rs12,400. But after the rupee became stronger, it came down to Rs10,500 against Dh1,000. This made a huge difference to me since my family’s buying power in India suffered,” said Shajahan, a worker in Al Quoz.

“With the high inflation rate here, we are anyway finding it difficult to save money. Besides, the poor exchange rate of the dirham against the rupee had accentuated our problems. I am happy now and hope the situation will get even better,” he added.

But for many like Murugan, a worker in Sonapur who is forced to remit his salary home every month irrespective of the exchange rate, there is not much choice.

Murugun said: “Though the exchange rate was low, we did not have a choice as we had to send money home for family maintenance.

“The higher value of the rupee in the international market may be good for India, but for poor workers like me, what matters is a good exchange rate when I remit money home.”

However, a few like Anwar Ahmed, an Indian marketing professional who had rushed to remit a large chunk of his savings to India in the hope of getting a better rate, said: The difference in the exchange rate has made a difference to my savings.

“I have been saving money to build a house in India and waited for a better exchange rate. With news that the value of the rupee had declined, the first thing I did was to send the saved money home last week,” he added.