UAE: Remittances to India jump by 25% as rupee hits all-time low

The currency has lost 11 per cent since January 2022, and could weaken further due to rising crude oil prices



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File photo
by

Waheed Abbas

Published: Sun 23 Oct 2022, 7:05 AM

Last updated: Sun 23 Oct 2022, 8:00 PM

Remittances to India from the UAE have jumped by 25 per cent as the rupee hit an all-time low of 83 versus the US dollar (22.61 versus the UAE dirham) earlier this week.

Senior officials of money exchange firms expect remittances to India will remain strong in the coming weeks due to the weakening of the rupee amidst high oil prices and trade deficit and depleting foreign exchange reserves.

The South Asian currency hit 83 versus the greenback on October 19. But it recovered to some extent and was trading at 82.74 against the American currency on Friday afternoon.

The rupee has lost around 11 per cent since January 2022.

“We have seen a surge in remittances to India since the breach of 83.0 level with around 25 per cent growth in volumes since that date. Many customers are remitting for FCNR (foreign currency non-resident account) deposits in comparison with the previous month,” said Hasan Fardan Al Fardan, CEO of Al Fardan Exchange.

A LuLu Exchange spokesperson said since the rupee crossed the 83 mark, there has been increased remittance activity. “We have witnessed over 20 per cent growth to the Indian corridor month-on-month, which can be attributed to the rupee’s weakening.”

Rashed Ali Al Ansari, CEO of Al Ansari Exchange, said they have recorded a four per cent increase month-on-month in remittances as Indian expats take advantage of the favourable exchange rates owing to depreciation in the rupee.

“The weakening of the rupee and the strength of the dirham have provided Indian expats with a greater purchasing power for their money, allowing them to remit more home to expand assets or pay off their debts and mortgages,” he said.

Remittances are a major lifeline for many emerging countries across Asia, the Middle East and Africa. According to the United Nations report released in July 2022, India was the top recipient worldwide at $87 billion in 2021. The UAE is one of the major sources of remittances to India along with the US, Saudi Arabia and other nations.

Al Ansari suggested that NRIs keep an eye on the rupee to be able to make an educated decision and take advantage of more remittance-friendly rates.

“We expect the remittance to India to remain high in the coming days.”

Rupee to hit 84

Hasan Fardan Al Fardan said the market experts suggest that the Indian rupee and other emerging currencies will weaken further due to rising crude oil prices, high trade deficit and depleting foreign exchange reserves. “Few studies have also shown an expectation of the 84.00 level to be marked in the coming sessions,” added Al Fardan.

LuLu Exchange spokesperson said in a statement that the Reserve Bank of India has been intervening to prevent the rupee from free fall. “We anticipate that it might test 83.35-83.40 against the dollar in the coming days.”

-waheedabbas@khaleejtimes.com

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