Pound may fall another 5% against UAE dirham

Dubai - The pound fell to a 20-month low against the UAE dirham on Tuesday.

The pound fell to a 20-month low against the UAE dirham on Tuesday after UK Prime Minster Theresa May called off a parliamentary vote on her Brexit deal. The British currency is likely to fall further due to uncertainty surrounding Brexit, analysts said.
The pound fell to 4.5925 on Monday evening against the dirham but recovered to 4.635 on Tuesday. But if the uncertainty persists surrounding Brexit, the analysts predict that the pound can fall another 5 per cent to 4.4 against the Emirati currency.
Lukman Otunuga, research analyst at FXTM, said with the chaos in Westminster raising the likelihood of a no-deal Brexit scenario or even worse, a disorderly Brexit trap, the pound has the potential to sink to levels not seen since March 2017 when it was below 4.53 against the UAE dirham.
"Appetite towards the pound is seen diminishing further in the coming weeks if May fails to renegotiate with Brussels in a bid to save the deal. Any signs of May facing a leadership challenge will expose the pound to downside shocks, consequently dragging the pound lower towards 4.4 [against the dirham]," Otunuga told Khaleej Times.
However, he noted that a scenario where the UK government seeks a second referendum will act as a lifeline for the battered pound, ultimately offering it an opportunity to rebound against the dirham.
The pound has fallen from a high of 5.239 against the UAE dirham hit on February 2 to 4.596 on December 10, losing 12.27 per cent.
Rajiv Raipancholia, CEO, Orient Exchange, said the outlook of pound is very bearish and expected to depreciate further to 4.50.
He advised British nationals residing in the UAE to remit according to the requirement as pound is expected to drop further.
Sudhesh Giriyan, COO, Xpress Money, said pound went down 2 per cent in compared to pre-announcement and but clawed back a little back but the trend and outlook seems negative.
"What Prime Minister Theresa May thought can happen about Brexit is not happening now so the trend seems to be negative. It is difficult to say how much pound can go down further because it is too early and we have to take a stock of it," he said.
He advised UK citizens in the UAE that whenever there is an opportunity during currency slump, they should make the most of it.
"Remittance went up in the past when dirham strengthened against Asian and UK currencies and definitely remittances will go up again," Giriyan added.
- waheedabbas@khaleejtimes.com