The Indian rupee's recent decline against the dirham has prompted more Indians to send money back home.
Rupee's dive against US dollar means rise in cash sent home
DUBAI // Iqbal Seth, a restaurant delivery worker, was all smiles yesterday as he looked at a white bank slip and saw his monthly remittance to his family in India having grown by 1,000 rupees (Dh77).
The increase was due to the rupee's declining value against the US dollar and dirham.
"I am a very lucky man because I usually send money home immediately, the day after I get my salary on the 10th of every month," said a laughing Mr Seth, who earns Dh1,500 monthly and says he checks the exchange rate daily.
"But this time I was late and it's very, very good. I usually cannot hold on to cash. I must send what I earn otherwise how will my house run in India? I just check the rates so I know what it is."
Mr Seth sends his entire salary home, living off Dh300 a month in tips, with food and accommodation provided by his employer.
Exchange officials in the UAE said they believed a substantial number of Indian workers and businessmen will send money home over the next few days to cash in on a better exchange rate.
"My advice would be, if it was my own remittance and with the slide so sharp, yes, it's a good time to send money to India," said Sudhir Kumar Shetty, the chief operating officer of UAE Exchange.
"Also, the signal in India is that the Reserve Bank of India will not allow the rupee to weaken further, so the bottom may be over.
"I feel the downslide is almost arrested and the rupee will gain piece by piece in coming days."
Several factors contributed to pushing Mr Seth's average monthly remittance of 18,300 rupees to a chubbier 19,320 rupees.
Europe's deepening debt crisis and worries that Greece will default led to the dollar strengthening and sent the rupee sliding, compared with the greenback, 10 days ago.
The rupee that was valued at 12.20 to the dirham before it dipped steeply to 13 rupees a dirham on Wednesday - its lowest rate since September 2009.
But the sharp slide began to reverse yesterday in what was widely thought to be the start of a correction. The currency showed signs of steadying at 12.88 rupees.
When the rupee hit the 48.01 mark to the US dollar on Wednesday, India's central bank intervened and sold dollars to steady the market.
This sign that the rupee would not be allowed to tumble further prompted many Indian businessmen to remit money.
"If you are a true, shrewd businessman definitely you will send money to India now," said Shabbir Rokadia, a Sharjah businessman who also planned to remit funds.
"It's best not to take a chance and wait further. For anyone interested in making investments in the stock market, also it's a good time because the rupee is lower."
The annual foreign remittance from Indians in the UAE is US$6.2 billion (Dh22.9bn), 12 per cent of India's total foreign remittances, a recent Standard Chartered report shows.
While the largest volumes come from the workers and labourers who send money home to their families, smaller volumes of higher-value transactions are remitted by businessmen keen on investing in property and the stock market at home.
"The bulk of the remittance in the Gulf comes from low-paid workers who don't have the option of waiting for a good rate," Mr Shetty said.
"But the high-earning bracket who have the capacity to hold back will do their transactions at this time."
Sobia Rahman, the regional vice president for the Gulf, Pakistan and Afghanistan for Western Union, said it was not unusual for Indian expatriates in the UAE to react to changes in exchange rates.
"Studies have shown remittances are resilient and often counter-cyclical," Ms Rahman said.
"On the other hand, some expatriates with regular savings in the UAE may consider sending their savings to benefit from the better exchange rate."
The day was also a happy one for Shibu Eapen. Standing outside an exchange house in Dubai's industrial Al Quoz area, he studied the bank slip.
"I get my salary on the 15th so I just sent it to home to India and the rate is really good," said Mr Eapen, a driver with a construction company.
"It makes me feel so happy to see more money go home."