UAE’s Indian expats get 10% remittance bonus, Filipinos get 5%

Emerging market currencies have seen sharp declines against the US dollar in the past week after US Federal Reserve Chairman Ben Bernanke said that the country will taper its $85-billion-a-month bond-buying programme later in 2013 if the US economy continues to improve.

After Bernanke’s comments, made late last week, the Indian rupee has made successive all-time lows amid concerns that a pullback of liquidity will add to the Indian economy’s woes, saddled as it is with a ballooning current account deficit and fundamental defects.

The rupee was the worst performing emerging markets currency yesterday, falling to its worst-ever exchange rate of Rs16.53 against the UAE dirham (Rs60.73 against the US dollar), down by about 1.9 per cent in a single Wednesday session. Read: Indian rupee falls to another record low: Rs16.53 vs Dh1, Rs60.73 vs $1

This has taken the rupee’s decline to 10.88 per cent in the first six months of 2013 alone, which means that Indians remitting their money today will be able to send almost 11 per cent more rupees for every dirham they exchange.

To further put the rupee’s rout in perspective, the Indian currency closed the forex trading session on August 2, 2011, at Rs11.99 against Dh1, and has since then slumped a massive 37.8 per cent in less than two years.

While an improving US economy and the subsequent tapering off of the Fed’s stimulus, commonly known as quantitative easing programme, is having an effect on the values of most emerging market currencies, the decline in the Indian rupee has been most pronounced.

The Philippines peso is among the other major expat currencies that have suffered at the hands of the US dollar-linked UAE dirham. The Philippines peso is down 5.6 per cent in the first six months of 2013, with Dh1 yesterday fetching PHP11.81 as against PHP11.18 on December 31, 2012.

Also affected but to a much lesser extent is the Sri Lankan rupee, which is down a little over 2 per cent in 2013, from LKR34.58 vs. Dh1 on December 31, 2102, to LKR35.29 yesterday. The least affected among major expat currencies is the Pakistani rupee, which has seen a decline of a mere 1.6 per cent this year. One UAE dirham fetched PKR 26.94 yesterday, compared with PKR26.50 on December 31, 2012.

Nevertheless, even the Pakistani rupee is trading close to its all-time low of PKR26.98 that it made just a day earlier, on June 25, 2013.

With many Indian and other emerging market expats in the UAE awaiting their June salary in the next few days, the country’s numerous exchange houses are gearing up to remit record sums of money in the next couple of weeks.

And while the Indian central bank is expected to step in to try and reverse the rupee’s direction and put it back above the Rs60 (against $1) psychological level, not many analysts think that aggressive intervention on behalf of the Reserve Bank of India is the solution to India’s financial woes.

That can mean only one thing for the Indian expats in the UAE – further joy at the remittance counters, at least for now. 

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