Khaleej Times

WHY YOU MUST REMIT RUPEES NOW

- Waheed Abbas

dubai — If you’re a Non-Resident Indian (NRI) and looking to remit a handsome amount back home or planning to buy a property or invest in any venture, then the time is now.

Going by analysts and industry executives views, the Indian currency is likely to strengthen further against the US dollar, hence, against the UAE dirham because the Emirati currency is pegged to the greenback, in the wake of Reserve Bank of India’s (RBI) decision to cut rates last week and may strengthen as much as 1.1 per cent.

“Rupee has firmed up a bit more than we had expected it to. There hasn’t been radical movement, and we feel that it might not breach 63.30 against the dollar for the time being. However we can expect the Indian currency to hit 64.30 against the dollar in the month of August, as stocks across the globe are getting set to adjust with the third quarter earnings. In Indian markets too half yearly results are key to determine the trend of large cap and mid cap giants,” commented Adeeb Ahamed, CEO of LuLu Exchange.

Stability along with reform momentum attract inflows, which will further appreciate the rupee against US dollar Promoth Manghat, CEO, of UAE Exchange

Rupee has firmed up a bit more than we had expected it to. But we feel that it might not breach 63.30 Adeeb Ahamed, CEO of LuLu Exchange

The rupee has already been one of best performing emerging market currencies this year as it has hitherto increased by nearly seven per cent, thanks to inflows for foreign funds into the Indian equities.

The rupee was trading at 63.609 against the dollar and 17.311 against the dirham on Sunday afternoon. It hit a high of 63.58 last week against the US dollar — its highest level since July 2015.

The Indian central bank last week reduced the repo rate after a gap of almost 10 months by 0.25 per cent to six per cent.

Aditya Pugalia, an analyst with Emirates NBD Research, agrees with Ahamed. “With the economy continuing to make progress and the RBI shifting gears to boost economic growth, we expect the Indian rupee to continue to strengthen, albeit at a slower pace,” he noted.

The rupee, according to Pugalia, is among the best performing emerging market currencies in 2017, having rallied 6.8 per cent year to date. While the US dollar weakness has helped, the primary driver has been inflows from foreign institutio­nal investors into Indian equities. In the first seven months of 2017, foreign institutio­nal investors have bought stocks worth $8.9 billion.

Promoth Manghat, CEO, UAE Exchange, said the rupee could climb further in the near term as the RBI’s interest rate cut lures more inflows into local market.

“The break in USD/INR below 64 means the RBI will not hinder the inflows, leading to further near-term rupee appreciati­on. Asia’s third-largest economy has borrowing costs placed at the lowest since 2010, spurring growth and earnings along with encouragin­g foreign investment­s of about $8.8 billion in local stock this year. Economic and political stability along with reform momentum attract inflows, which will further appreciate the rupee. Meanwhile analysts are predicting INR to be range bound at 61-65 range per dollar by March next year.”

Don’t hold back

Since rupee is expected to strengthen further, NRIs have been advised not to hold back their liquid assets and instead go and invest in India

“The interest rates for deposits will not be tampered with in the near future as banks have already figured out the NPA [non-performing assets]. Adding to it, consolidat­ion of banks are on the cards in India. Therefore, there is no point in holding back liquid assets. In fact, it is the right time to invest in India as the entire world acknowledg­es it to be one of the fastest growing economies,” Ahamed advised.

Manghat said it’s a good time for NRIs to remit funds to NRE accounts as the rupee is expected to range between 61 and 65 per dollar.

“Since the GCC is mostly US dollar-denominate­d, the interest rate reduction in India or minor appreciati­on in rupee value isn’t going to impact much the fund transfers of a non-resident Indian, who will anyway enjoy an overall benefit. Also, capital markets are doing well in India. NRIs should take advantage of the same and look beyond NRE deposits to invest in the capital market,” Manghat advised Indian expatriate­s.

He predicts the rupee’s appreciati­on should comparativ­ely reduce the remittance volume. But the regular remitters will send money for family maintenanc­e irrespecti­ve of currency fluctuatio­ns. Opportunis­t remitters wait for currency depreciati­on to take advantage of getting more money in conversion while sending money to India.

— waheedabba­s@khaleejtim­es.com

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