Indian expats living in the Middle East have rushed to send money home following a dramatic decline in the value of the rupee, according to local money exchanges.
One firm estimates the spike in remittances at 10 to 12 percent over recent weeks, as Indians look to take advantage of favorable rates when exchanging currencies like the UAE dirham or Saudi riyal.
“A 10 to 12 percent spike in remittances is what we are seeing in the past few weeks, since the fall of the rupee started,” said Sudhesh Giriyan, the Vice President and Business Head of Xpress Money, a company used to remit money abroad.
Indians are expected to send record sums home this summer, given the drop in price of the rupee, as well as the traditional spike in remittances during the Eid holidays that mark the end of Ramadan.
“Festive seasons have perpetually witnessed a rise in remittances,” Giriyan told Al Arabiya. “We generally see a growth of 15 to 20 percent in terms of remittances from Middle East and other ‘send’ markets [during Eid]. The festive occasion coupled with the significant depreciation of Indian rupee could give a boost to remittances flowing to India.”
Sobia Rahman, Regional Vice President for the Gulf, Pakistan and Afghanistan at Western Union, told al-Arabiya that there was typically a spike in remittances when exchange rates were favorable.
“Consumers will increase the principal amount sent when the currency is strong, in order to benefit from the more favorable exchange rates,” she said.
Last year India received a total of $69 billion in remittances. More than $14 billion was sent from the United Arab Emirates, the top source of remittances to India, according to the World Bank’s Migration and Remittance Unit.
A year ago, Dh5,000 would have bought an Indian expat 75,250 rupees. Following the recent drop in the rupee, the same amount would now buy you 82,650 rupees; the difference of 7, 400 rupees could buy you 370 loaves of bread in India.
The rupee, currently the worst-performing currency in Asia, last Tuesday slumped to an all-time low of 16.82 rupees against the UAE dirham.
The fall in the value has reduced the cost of home purchases for non-resident Indians (NRIs) by around 25-30 per cent, according to a report by Indian internet portal Sulekha.com.
Despite the decline in the value of the rupee, some analysts advise NRIs to hold on to their money, as the currency could fall even lower in coming months.
“The rupee is on a runaway train and no one knows where it will stop,” Naveen Mathur, a senior analyst at Mumbai’s Angel Broking, told AFP.
Rahman told Al Arabiya that “exchange rate movement can be very unpredictable, which makes the practice of market timing tricky at best.”