Indian expatriates are rushing to send money home after the rupee slumped to a new record low against the dollar.
The Indian currency has fallen by about 10 per cent this year alone, a significant drop compared to recent years, according to experts.
Although in dirhams their wages remain the same, a worker is able to send 10 per cent more rupees now compared to last year.
The fact the latest drop coincides with a payday weekend has provided an extra boost to those flocking to money exchange centres to send cash to their families at home.
The lowest mark of 70.66 to the dollar occured on Wednesday - prompting expatriates to take advantage.
The rupee traded at 19. 3 to a dirham on Thursday. The dirham is pegged to the dollar.
For hotel manager Faisal Jurani, the currency dip was an opportunity to gain more rupees for the dirhams he has saved for his 'retirement' plan in India.
“I have been watching the rupee fall and now is the time for me to finally send the money home that I have been saving up,” said Mr Jurani, who checked the rate at a money exchange in a Dubai mall.
“This is part of my retirement plan so I look for chances like now when I can get more rupees for the dirham.”
Electrician Ahmed Rahba, who usually sends home Dh700 every month, said due to the favourable exchange rate he sent about 1,000 rupees (Dh52) more to his family in India.
“My wife and children depend on me to send money at the end of every month for school and daily expenses. It’s just lucky for me that it has happened now so I get an advantage.”
Money exchanges in the UAE were expecting a strong flow of remittances. While the surge in remittances coincided with thousands of blue-collar workers sending money home at the end of the month, experts also expected other expatriates to remit large amounts.
“Whether the rupee is appreciating or depreciating, the large numbers of labourers have to send money on a particular day every month because of family commitments. When the rupee weakens they get more rupee for their dirham and they are happy about it,” said Sudhir Kumar Shetty, president of the UAE Exchange.
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“But the remittances spike when the middle and upper income groups wait for an opportune time to send money. They are rushing to remit. The increase in volume that we see is from mid and upper class segments who remit for investment in shares, deposits and other funds. Their remittance is not periodical or every month, they wait for an opportune time. This good dip in the rupee is what is encouraging large size remittances.”
The rupee’s fall of about 10 per cent this year is substantial compared to a depreciation by about 4 per cent on average over the past 10 years, he said.
A rise in oil prices is one reason for the rupee to weaken.
“This is an all-time low for the rupee that is under pressure because of increased oil prices, a balance of payment problem because India’s import bills are going up due to higher oil prices and a fiscal deficit because the government expenditure is more than the revenue,” he said.
“With elections around the corner, emerging markets funds are also withdrawing and these factors are pushing the rupee southwards.”
Senior business leaders said the rupee would continue to weaken.
“The business community will continue to look at economic parameters because the rupee has not yet touched its lowest point and it is felt that it will depreciate further,” said Sudesh Aggarwal, chairman of the India Trade and Exhibition Centre.
“For commercial business transactions, it is a wait and watch situation.”
Despite further anticipated fluctuations, for electrician Mr Rahba money was required back home and he handed over a portion of his salary to the exchange officer.
“I have heard people say I will get more benefit if I wait but I don’t have that luxury. The extra money this month is a big advantage to pay loans I have.”
