Remittances: It pays to wait for currencies to drop
Here’s where South Asian currencies are headed in the last weeks of April
Remittances from the UAE are seeing a sharp surge as several, particularly South Asian currencies, were losing ground in the past weeks. However, the trend may not last long.
With the Indian rupee currently at 20.34 to the dirham, it last weakened to 74.7 against the US dollar. The Indian rupee is expected to average between Rs20.4-21 against the dirham this month.
In May, the rupee may drop to as low as Rs20.7before rebounding back slightly by the end of the month.
During the rest of 2021, analysis indicates that rates will stay around the 21-level or higher, indicating that now is the most cost-effective time to remit, when compared to the remainder of the year.
Pakistani rupee
In Pakistan, the buying rate of the US dollar was 152.88 Pakistani rupee (41.6 versus dirham). The Pakistani rupee is expected to drop to Rs40.7, from the current Rs41.6 against the dirham in the remaining of April — dropping to as low as Rs40.4 in the first couple of weeks of May.
During the last two weeks of May, will mostly average between 40.9 and 40.4. Global ratings agency Fitch Solution predicts the Pakistani currency to average weaker at Rs171.15 for every dollar in 2021.
Philippine peso
The peso is expected to average between 13.19-13.26 against the UAE dirham over the next month, with no major fluctuations seen — making it ideal to send money any time over the next coming weeks.
The average exchange rate against the dirham in April will be 13.2, with the currency slipping just 0.2 per cent in the month. Over the month of May, rates are expected to stay largely the same at the end the month while the exchange rate averages at 13.24.
However, during the following months of June and July this year, rates are expected to spike about 1.4 per cent to over 13.36. So, it would be cost-effective to remit during the preceding months. The Philippine Peso dropped 1 per cent during the last quarter.
Other South Asia currencies
With the world’s worst performing currencies in the entire Asian region, it can be ascertained that some South Asian currencies are getting weaker with respect to the dollar. When analysing exchange rates for Bangladeshi Taka against the dirham, rates averaged at 23.09 over the last 180 days.
The Thai Baht was the worst performer during the first quarter, as its fundamentals were eroded due to lack of tourist spending.