Falling rupee brings cheer to Indian expats

The Indian Rupee (INR) dropped to its lowest level in the past eight months yesterday to Rs47.70 per dollar, bringing cheer to the Indian expatriate community in the UAE.

The exchange rate against AED has fallen to Rs13 per dirham or Dh76.92 per Rs1,000, recording a drop of eight per cent in the first quarter of 2010.

"The Indian rupee is expected to move based on the trends in Europe and the performance of the Indian stock markets," said Y Sudhir Kumar Shetty, COO, Global Operations, UAE Exchange, a leading money exchange house in the UAE. "The first quarter of the year witnessed a stronger rupee and comparatively a weaker rupee in the past few days of this quarter."

Depreciation of the Indian rupee against the US dollar means the Indian currency weakens against the UAE dirham, which is pegged to the dollar.

The rupee fell, pressured by rising foreign fund withdrawals and falling stock markets. Industry experts believe the rupee is losing its ground steadily on account of high fiscal deficit and rise in the cost of crude oil imports and the withdrawals by the foreign institutional investors (FII) in the wake of the European crisis.

The prevailing negative sentiment also hit the capital markets. The BSE index fell by around 447 points or 2.71 per cent to close at 16,022 points yesterday.

Exchange houses in the UAE find it an opportune moment to prod its customers to remit money to India now, taking advantage of the 'best' rates.

"The Indian rupee has fallen sharply in the past one month," said the General Manager of a Dubai-based exchange house. "It has touched its eight-month low since October 1, 2009. Every AED fetches you Rs13 as at Tuesday. The rate can be sweetened if someone is remitting money in bulk.

"We have started calling all our clients, seeking to remit money to India. Good rate is prevailing and it's a good time to remit money to India."

D Narayanan, Deputy Chief Executive, GCC Operations, Bank of Baroda, told Emirates Business: "It's a very volatile market. The rupee has been continuously falling over the past one week. Nobody is able to take a call if the trend will continue going forward. We expect some correction in the near future."

Exchange houses have already started witnessing upsurge in remittances in this quarter after a decline of eight per cent in the first quarter on yearly basis.

"We are witnessing equilibrium in remittance, whereby the impact due to decline in numbers in certain regions has been nullified by the upsurge in activity in others. This also has helped offset the impact of recession on remittance to a great extent," Shetty added.

UAE Exchange is the leading exchange in the UAE with a market share of more than 50 per cent.

"The Indian rupee has weakened against the US dollar and subsequently the UAE dirham mainly because of the European crisis. The Indian stock market has been steadily falling over the past one month. The FIIs are exiting the Indian markets and withdrawing funds," said a fund manager based in India.

 WHAT DO YOU THINK? Have you remitted money home in the last two days? Write a comment below to share your thoughts, hopes and concerns.

Follow Emirates 24|7 on Google News.