Indian expats top the list of remittances from UAE to cash in on weaker rupee
Remittances to home countries surged by 13.1 per cent to Dh88 billion.
Remittances by expats in the UAE surged 13.1 per cent to Dh88 billion from Dh77.8 billion during the same 2017 period as the dollar-pegged dirham relentlessly gained against currencies of major recipient countries.
India has retained its position as the top-receiving country as Indian expatriates remitted a total of Dh17.32 billion, accounting for 39 per cent of total remittances, in the second quarter of this year.
The three-month period saw a jump of 8.8 per cent in transfers to Dh44.4 billion as against Dh40.7 billion during the same period last year, data from the Central Bank of the UAE data shows.
Other top recipient countries in the second quarter included Pakistan, which received 8.5 per cent, or Dh3.55 billion of total remittances; the Philippines, accounting for 7.1 per cent, or Dh3.15 billion; Egypt, with a share of 5.4 per cent or Dh2.4 billion; the US, making up 4.9 per cent or Dh1.95 billion; Britain with 3.8 per cent; and Bangladesh with 2.6 per cent.
Y. Sudhir Kumar Shetty, president of UAE Exchange, said a strengthening dollar has worked to the advantage of expats in the UAE as it meant more money in their accounts back home.
"Most of the expatriates in the UAE are from South Asian countries, where currencies get weaker against the dollar. Since the UAE dirham is pegged to the greenback, it stands strong and steady, enabling expatriates to send more money home," said Shetty.
While regular remitters will send money irrespective of the currency value, it is the big-ticket senders who are taking advantage of this situation by sending more money to home accounts, spiking the volume of remittances phenomenally, said Shetty.
Adeeb Ahamed, managing director of LuLu Financial Group, said a number of factors had influenced the surge in outward remittances from the UAE compared to the previous year.
"Currency fluctuations, especially with the Pakistan rupee and Philippine peso, have contributed to the hike in remittances out of the UAE in the first half of the year. Adding to it, there has been a spurt in economic activity in the region, which has allowed greater employment opportunities for expats, when compared to the previous year. All these factors and more have helped expats transfer more money to their home country. Furthermore, with better awareness, more people are using authorised channels to send money back home," said Ahamed.
Pradeep Unni, head of strategic business development at Richcomm Global Services DMCC, said attractive exchange rates have been triggering increased remittance to India and other Asian nations over the past few months with most currencies, especially emerging-market currencies, weakening against the dollar and the dirham.
"Unlike the last few times when the rupee fell, this time the currency continued to trade at all-time-low levels for a considerable time giving enough time for expats to collect funds and send home. The increased fear that India and other nations will take quick steps to prop up their currencies also resulted in additional funds being remitted," said Unni.
According to the Reserve Bank of India, the UAE has emerged as the top source of inward remittances to India, while Kerala has been the top recipient of funds sent from abroad.
The UAE's share in total remittances to India, world's top remittance recipient nation, was 26.9 per cent followed by the United States (22.9 per cent), Saudi Arabia (11.6 per cent) and Kuwait (5.5 per cent).
In 2017, India retained the position as the world's number one recipient of remittances with its diaspora sending about $69 billion back home last year, according to the World Bank.
According to the World Bank, in 2018, global remittances are expected to continue to increase by 4.1 per cent to reach $485 billion. Global remittances are expected to grow 4.6 per cent to $642 billion in 2018, said the report.
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