Foreign exchanges see spike in expats sending money home and buying euros at favourable rates
UAE residents cash in as tumbling euro and rupee sparks buying boost
Foreign exchanges across the UAE reported a spike in demand for euros on Tuesday as the currency continued to see a drop in value.
Factors including concerns over the Turkish lira as well as the upcoming Eid Al Adha holiday saw many residents take advantage of the slump.
Staff at exchange centres have seen more high value transactions than they would normally expect at this time of year.
Analysts said the strength of the US dollar – currently at a 13-month high - also meant now was a great time to buy euros.
“We have had a lot of enquiries for the euro this week,” said Angelica Reyes, a supervisor at UAE Exchange in Dubai.
“Just today we’ve done five high value transactions, which is not common. Each of those was above Dh30,000, with two being for more than Dh100,000.
“We were expecting the demand so we have plenty of currency in stock.”
The value of dirham against the euro has strengthened in recent months, primarily due to it being pegged to a strong-US dollar.
US markets have continued to grow in confidence as the economy expands apace, despite the serious potential threat posed by escalating trade wars.
By comparison, continued doubts over Europe’s long-running Brexit negotiations with the UK have led to increased uncertainty for the euro.
And recent US sanctions on Turkey over its refusal to extradite a preacher imprisoned in the country has also sparked further concerns among traders that a slump in the lira could spread to Western Europe.
On Tuesday, clerks at the Al Wahda Mall branch of UAE Exchange in Abu Dhabi claimed demand for euros was three times greater than usual due to the currency’s slide in value.
“All our Euros are almost finished because of Eid and because the euro is dropping,” said Abdullah Mostafa, a cashier at the exchange.
“The increase in buyers began about five days ago.”
At the Al Ghurair Exchange in the Mall of the Emirates in Dubai manager Kasim Aboobakar, said one euro was currently worth Dh4.18 compared with Dh4.45 in February.
He also confirmed his staff had seen a significant spike in customers wanting euros, too, with one individual purchasing €30,000.
“It is usual for customers to buy euros but we’ve seen more bigger transactions than usual this week.
“It’s a good time to buy, and judging by the amount people that are buying, it’s not just to fund a holiday to Europe but more of an investment because the rates are so good.
“If the price is down, they will buy more and keep hold of it, then come back to us and sell when the price rises to make some money.
“One customer today purchased €30,000 which was a large amount. But Eid is coming up so we have plenty of currency in house to prepare for the demand we’re expecting.”
Aside from the euro, currency traders also noted an increase in remittances to India from the UAE following the rupee's record low of 69.92 against the US dollar.
Sudhesh Giriyan, chief operated officer at Xpress Money, said the trend was lightly set to continue and could mean "a surge in remittances in the next few weeks".
"The Indian rupee has plummeted to a record low of 69.92 against the US Dollar," he said.
"The weakening of the Turkish lira, due to the political unrest in the country, has put the emerging market currencies under pressure, which is why we are witnessing this sudden decline."