Expatriates sending money home are benefitting after the US dollar, to which the UAE dirham is pegged, hit a three-year high.
Expats rush to send more cash home from UAE as value of dirham soars
Business at currency exchanges surged by as much as 25 per cent after the dollar hit a three-year high, boosting the value of dirhams sent home by expatriates.
The amount of cash sent back has also risen with some expatriates even taking out loans of up to 10 times their salary in the UAE to take advantage of the greenback's strength and the weakness of Asian currencies.
Most are sending money back to India and the Philippines, while remittances to Syria and Egypt have also spiked in recent days, say local exchanges. The strong dollar has also meant that dirhams earned by British, Canadian and euro-zone expats now go further.
"I have seen many more customers come in now, about a 20 to 25 per cent increase," said RVSalim, the branch manager of Al Ansari Exchange at Mall of the Emirates. In Deira or places like this where there are more Indians, it will be an increase of up to 40 per cent," he said.
The strengthening dollar, to which the dirham is tied, is being seen as an arbitrage opportunity by some expatriates seeking to benefit from higher interest rates in their home countries.
"We have had customers taking out the maximum loans they can and coming here to exchange them and send them back to their home countries," said Krishna Kumar, the branch manager at Al Fardan Exchange.
"The interest rate here is maximum 4 per cent but in India it is 10 per cent, so it is very good for the customers to do this."
The dollar has rallied 8.1 per cent this year. At the same time, Asian currencies have fallen, led by the Indian rupee, which continued its ninth consecutive week of losses, falling 1.4 per cent on Friday.
The Philippine peso weakened 0.5 per cent to 43.405 per dollar.
"The dollar destroyed expectations," said Gaurav Kashyap, the head of DGCX desk at Alpari Middle East. "The new jobs in the US triggered a fresh buying rally, which keeps pressure on the US Federal Reserve to tone down the quantitative easing programme, which has a positive impact."
Better than expected jobs data from the United States last week was the latest boost for the dollar, which has strengthened amid signs that the Federal Reserve will pare back on stimulus measures.
"It has put pressure on the Indian rupee. Looking at the week ahead, the dollar will remain on the front foot," Mr Kashyap said. "We expect the remittance trend from the beginning of June to continue. Demand is high, largely from the labour population so it makes sense to send money back home at this time."
Exchange houses in malls across the country reported a bustling trade yesterday ahead of the start of Ramadan on Tuesday.
"Every three months we send money back to India, and we wait until the exchange rates specifically for India are good," said Kishore Bajaj, a project manager at a local insurance company in Dubai. Over the past two months the amount we have been sending has increased comparing it to six months ago," he added.
Wynel Amistad, a plant operator from the Philippines, joined the queues outside Al Ansari in Mall of the Emirates yesterday to make his monthly remittance home.
"I send money to the Philippines every month, it is better now because the dollar is strong," he said. "I have a budget every month, but my family is asking for more, so today I sent back more than last month."