E-Paper
Sign In
UAE: As Trump’s tariffs weaken Asian currencies, experts assess impact on remittances
Each expat's strategy should be tailored to their home currency and personal financial needs, the experts say
- PUBLISHED: Mon 3 Feb 2025, 5:39 PM UPDATED: Mon 3 Feb 2025, 9:29 PM
With Asian currencies tumbling and some hitting record lows, it is the perfect time for UAE residents to send money back home, according to some experts. On Monday, Indian rupee dropped to an all-time low while other Asian currencies also weakened.
“For UAE-based Asian expatriates earning in dirhams, the current market presents an opportunity to consider remitting funds to one's home country,” said Wai Ken Wong, Regional Director of digital wealth manager StashAway. “With currencies like the Korean won reaching a 15-year low and the Indian rupee touching record lows, those sending money home are finding their dirhams stretching further than ever before.”
Recommended For You
The Chinese offshore yuan dropped 0.36 per cent to 7.347 against the US dollar while the Indian rupee fell to a record low of 87.101 against the greenback. The South Korean won depreciated 0.83 per cent while the Japanese Yen fell 0.19 per cent.
Others are, however, of the opinion that a wait-and-watch policy would be more beneficial as the financial landscape is changing.
“With tariffs likely to introduce more volatility and further weakness expected in regional currencies, individuals seeking better exchange rates may consider waiting for greater clarity on the trajectory of US trade policy,” said Adeeb Ahamed, Managing Director of LuLu Financial Holdings.
Follow KT on WhatsApp Channels.
“Alternatively, holding funds in stronger currencies such as the US Dollar might be a prudent option for those concerned about continued depreciation in Asian currencies.”
On Monday, Asian currencies slumped after US President Donald Trump imposed tariffs on the country's largest trading partners, driving a surge in the US dollar. In three executive orders over the weekend, Trump imposed 25 per cent tariffs on Mexican and most Canadian imports, and 10 per cent on goods from China, starting on Tuesday.
Uncertainty looms
According to Adeeb, the conditions have created a “market uncertainty” which will are compounded by other factors. “The tariff imposition triggering capital flight toward the US dollar and causing most Asian currencies to weaken,” he said. “Concerns over slowing economic growth has also contributed to the depreciation, making Asian currencies more vulnerable. As a result, the Chinese Yuan, Indian Rupee, South Korean Won, and Japanese Yen have all declined, with markets anticipating further weakness across ASEAN currencies.”
However, one expert said this could also have a positive impact. “While this depreciation has significant side-effects, it is often favoured by policymakers in Asian countries,” said George Khoury, Global Head of Education and Research at CFI Financial Group. “Given their strong export-driven economies, a weaker currency makes exports more attractive due to lower costs.”
He added that the weakening of Japanese Yen (JPY) for over five years has caused it to lose nearly 50 per cent of its value against the US Dollar, and that the Chinese Yuan (CNY) is hovering near its weakest levels in history.
Future expectations
Wai said that Asian currencies will continue to “face pressure” in the immediate future.
“The market expects the Federal Reserve to hold off on rate cuts until mid-year, while the impact of trade tensions and potential retaliatory measures from affected countries could introduce additional volatility,” he said. “For expatriates a balanced approach might be most prudent. Consider splitting remittances between immediate transfers to capitalise on current favourable rates while maintaining some savings in dirhams as a hedge against further currency movements. Each expatriate's strategy should be tailored to their home currency and personal financial needs.”
George added that situation of the JPY and CNY will be complex as well. “Japanese policymakers have been actively discussing the possibility of additional rate hikes, despite recently raising interest rates to 0.5 percent,” he said. “Further measures may be required to address rising inflation in Japan while also stabilising the weakening Yen.”
He further said that Chinese authorities anticipate further depreciation and may even welcome it as a response to the recent US tariff measures. “While a weaker Yuan could enhance the competitiveness of Chinese exports, it may also significantly impact capital inflows and outflows,” he said. “This, in turn, could prompt the government to implement further stimulus measures to support the economy and maintain financial stability.”
ALSO READ:
Gulf markets fall on trade war escalation fears
Indian rupee plunges to record low against UAE dirham as Trump tariffs rattle Asian currencies
Stocks slump, dollar soars as Trump tariffs trigger trade war fear
Will GCC get caught in a global trade war crossfire?
ALSO READ:
