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29 March 2024

Rupee climbs to 12 against dirham

Remittances affected as rupee climbs against dirham. (FILE)

Published
By VM Sathish

Expatriate remittances from the UAE to India has slowed down as the Indian currency has appreciated substantially due to widening interest rate difference between India, US, Europe and other countries.

Money exchanges in the UAE, which are normally active during the early month salary days, are seeing a considerable decline in business as the Indian rupee and UAE dirhams exchange rate fell to Rs12 on Sunday.

“For Rs1,000, you pay around Dh 83, which is among the highest rates in the past one year. The Indian currency has been appreciating steadily due to increased flow of foreign funds to the country. The recent credit policy has caused a change in the interest rate and now the interest rate difference in India or USA or Europe have widened. The difference of about 5 per cent is attracting a lot of foreign funds to Indian markets,” said an official from Hadi Express Exchange, a money exchange company under South Indian Bank.

“Remittances were already affected by the economic slowdown. When people have lot of money, they don’t mind the exchange rate. Now every penny counts and when the rupee-dirham rate has reached this high, people with money are waiting and watching,” he added.

The remitters were also unhappy with the exchange rate. “Every month I am sending money to my family. This month I will have to spend more money because the exchange rate is too bad.  I don’t know what will be the situation next month,” said Sushant Kumar, an Indian expatriate worker.

The Indian currency posted its best weekly gain in nearly nine months on Friday. The partially convertible rupee closed at 44.47/48 per dollar after hitting 44.46, its strongest since April 30 and 1.1 per cent above Wednesday’s close of 44.94/95.

“Dollar weakness is causing a corresponding appreciation of Indian rupee. Even though the conversion rate is not attractive, investment opportunities are robust in India and exchange rate is not the only factor that investors consider for remitting money. The rupee is likely to appreciate further and remittances for family maintenance will be affected,” said Sajith Kumar PK, Director and Chief Executive Officer, JRG International Brokerage.

Reports suggested that expatriate remittance to India was not affected by the global economic slowdown. The Reserve Bank of India reported that there was an increase in NRI remittances due to weakening of the rupee and high interest yielded by NRE deposits. The Gulf accounts for about 27 per cent of the total remittance inflows to India, with major source countries being the UAE and Saudi Arabia.

The money exchange companies witnessed relatively good business last month, due to the festival season – Eid, Onam and other festivals.