x Abu Dhabi, UAESaturday 22 July 2017

Indians cash in on slump in rupee value

Favourable exchange rates mean UAE-based expatriates can invest more in India.

There is speculation that the rupee value against the dollar will slump further in the coming months, reaching up to 56 rupees.
There is speculation that the rupee value against the dollar will slump further in the coming months, reaching up to 56 rupees.

Remittances from the UAE to India are rising in line with the value of the dirham against the rupee.

"We don't have any factor to substantiate that the rupee might strengthen, but there are so many factors that tell us the rupee is under pressure," said Y Sudhir Kumar Shetty, chief operating officer of global operations at UAE Exchange.

He predicated rates would stay attractive "for at least six months".

In 2008 and 2009, the exchange rate fluctuated between 10 and 11 rupees to the dirham. Now, it is about 14.5.

Abdul Gafoor Kadavath, from India, a senior officer with Union National Bank, said: "This is the best time to send money back home.

"There are speculations the rupee value against the dollar will slump further in the coming months, reaching up to 56 rupees."

The rate is currently 53.42 rupees to the US dollar. The dirham is directly pegged to the dollar.

"I send some every month to support my family," said Mr Kadavath. "Twice a year I send for investments in India."

Ameen Mohsin, an Abu Dhabi resident, said: "It's a good thing happening. This is the right time to invest in India."

According to the World Bank, 20 to 25 per cent of the US$64 billion (Dh235bn) flowing into India last year in remittance money came from the GCC.

Remittances have also increased because Indian banks are offering attractive rates on deposits.

Mr Shetty said non-resident Indian accounts pay almost 10 per cent, with a net yield of 12 to 13 per cent.

And more money is being sent home as more technically qualified people move to the region, in particular to the UAE.

The remittance industry has been growing between five to 10 per cent annually, said Mr Shetty.

Every day, more than 100,000 people of different nationalities send money home from one of the 108 UAE Exchange branches across the Emirates.

Now that funds can be transferred in seconds, as opposed to years ago when it took months, more people are using formal channels to send money home.

Whatever the economic climate, a Middle East-based expatriate will send money home because somebody is there who needs it.

"If you see the expatriate community in Europe and the US, they are all there for generations and have settled down and there is nobody waiting to flow back the money," Mr Shetty said. "Whereas the entire community who are residing in the Middle East, they have still very close ties with families back home in India.

"There is a [continuous] amount of money sent by them every month."

anwar@thenational.ae

 

@For more on INDIA, visit thenational.ae/topics