Re fall: Gulf Indians send wads of money home
NRIs take advantage of high exchange rate, rush to remit all their savings
The recent drop in the value of the rupee against the greenback is luring the Indian diaspora in the Gulf to remit more money to their families back home.
Money exchange firms saw a 20-30 per cent surge in inward remittances during the last fortnight.
Several non-resident Telugus (NRTs) in Dubai have applied for office loans so that they can send more money to their families.
This correspondent spoke to NRTs and money exchanges in Dubai, Abu Dhabi and Saudi Arabia and found that expats were in a hurry to remit more money home.
Jagtial native Rajender Reddy who works as an assistant manager at a leading mall in Dubai sent his year’s savings in one go to take advantage of the high exchange rate.
He said, “On Friday, I sent 45,000 dirhams to my family. The latest drop of the rupee value fetched me `81,000 extra when compared to a few months ago.”
Mr Sudhakar Adepu, a site engineer in Abu Dhabi, said he borrowed 50,000 dirhams from his company and sent the entire amount to his family in Koratla.
“Dh50,000 at the exchange rate of 18.8 fetches `9.4 lakh, against `8.5 lakh when the the rate was 17. Because of the latest drop in the rupee rate, I got `90,000 extra. The loan from my company is interest-free. That’s an added advantage,” he said.
Mr Adeeb Ahamed, MD, LuLu Financial Group, Abu Dhabi, said remittances were on the rise. “With the drop in rupee value against the US dollar, remittances from the GCC (Gulf Cooperation Council) countries have increased by around 10-15 per cent during the last week,” Mr Ahamed said.
“We feel the mounting oil prices are a major concern as well as threat for the rupee. If corrective measures are not taken, we are of the opinion that the rupee would test 69.40 within the next few days,” he added.
Remittances to India rose 9.9 per cent in 2017 to $69 billion, according to the World Bank. With 25-30 per cent of share, Kerala is the largest recipient of inward remittances followed by Punjab, Tamil Nadu, UP, TS and AP. Before bifurcation, united AP was at second position after Kerala, followed by Tamil Nadu, Punjab and UP.
A manager, at a local money exchange in the city on the condition of anonymity, said, “Inward remittances rose over 30 per cent during the past one week.” Mr Ahamed feels that the rupee would remain volatile, unless there is some relief from the trade conflict between the East and West.
The recent drop in the value of the rupee against the greenback is luring the Indian diaspora in the Gulf to remit more money to their families back home.
“He said that generally, GCC countries account for 60 per cent remittances mostly from Dubai and Saudi Arabia and the US contributes 22 per cent, while the rest comes from the UK, Canada, Australia, etc,” the manager said.
After recovery, the rupee is hovering at 18.67 per dirham as against its recent low of 18.92, when the rupee fell to 69.09 to the dollar on June 28. The exchange rate at which remittances are made, is usually different from what is offered by money exchange companies and banks. The remittances further picked up when rupee nosedived to its fresh alltime low 69.10 on July 6.
“Ramzan and Id months are usually considered busy months for remittances. During the succeeding two months, the remittance volume would come down significantly. Moreover, school holidays and reopening of schools (in India) are the factors which affect remittances to some extent. However, big ticket remittances by high-net worth expats would make use of the current falling rupee and avail the opportunity,” Mr Adeeb Ahamed, MD, LuLu Financial Group, Abu Dhabi, said.
The currencies of GCC including the UAE dirham and Saudi riyal are pegged to the US dollar. These currencies fluctuate along with the dollar movement.
Mr Ahamed said: “We feel that, in the event of continuation of the trade war, stock markets across the globe would falter. On the other side, oil prices are touching their highest levels since 2013. This would result in further weakening of the rupee against the dollar.”