Weak dollar leaves expats short of cash at remittance counters

Beginning of the month, and you’d expect UAE expats to be queuing up at the counters of the numerous currency exchange houses in the country to remit a part of their freshly-arrived salaries back home.

This week, however, a number of expats – notably from India and the Philippines – seem to be in no rush, with remittance counters at exchange houses not sporting the long queues that are rote at this time of the month.

Why? Blame the weaker US dollar.

This weekend, Indian expats got an exchange rate of just Rs14.19 for every dirham they remitted. That’s a far cry from the Rs15+ exchange rate that they got accustomed to over the past few months. The rupee has strengthened more than 8 per cent over the past quarter.

One UAE dirham – which has a straight peg to the US dollar – fetched up to 15.55 Indian rupees about three months ago. Even this time last month, the dollar was strong enough to command an international exchange rate of Dh1 = Rs15.25.

But a weakening global economy coupled with India announcing a raft of stalled reforms have led the Indian currency to appreciate against the US dollar – and, therefore, the UAE dirham – much to the disappointment of Indian expats.

It isn’t just the Indian rupee, though, that has seen its fortunes turn around. The Philippines peso too is on the same boat although its rise (in dirham terms) is less acute than the rupee.

About four months ago, one UAE dirham used to fetch about 11.90 Philippines pesos. This weekend, the rate at the exchange houses was
PHP11.24 for Dh1.

The recent strength of the Indian and the Philippines currencies means that remittances from the UAE (and elsewhere) have slowed down.
Acknowledges Y. Sudhir Kumar Shetty, COO – Global Operations, UAE
Exchange: “Compared to the times when both Indian Rupee and Philippines Peso were at all-time lows, remittances have slowed down now.”

Shetty, however, told Emirates 24/7 that the ‘slowdown’ in remittances is a very recent and perhaps temporary phenomenon, and that the past months saw UAE expats leverage favourable exchange rates by remitting ‘good’ amounts.

“The month of Ramadan has just passed, during which period there was a good money movement to these countries [India and the Philippines],”
he said.

Moreover, those with monthly commitments back home – EMIs for loans and mortgages, or family support commitments – do not have much flexibility in their remittances, whatever be the exchange rate. It is for those with large investible sums of money that the exchange rate movements matter, he explained.

“At the same time, monthly remitters have always kept their frequency steady and we are seeing a slowdown on large ticket transactions,”
Shetty told this website.

“The Indian Rupee had hit an all-time low in the recent past. Whenever the rupee is comparatively strong, we see reduction in large-ticket transactions, which we have seen in the last week as well,” Shetty concluded.

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