(MENAFN- Khaleej Times)
Will the Indian currency lose its value even further or is it a good time to send money now? These are the questions facing most Indian expatriates in the UAE as the rupee dropped to a record low on Wednesday, closing at 68.80 against the US dollar.
The slide of the Indian rupee continued on Wednesday sending expats to money exchange houses to capitalise on the favourable exchange rate which at the time of going to press stood at Rs18.78 against the dirham. -KT photo by Mukesh Kamal
Money exchange houses in the UAE offered a record Rs18.78 for every dirham by evening as financial experts predicted the currency could fall further with India's decision to go ahead with the food bill.
"Remittances to India have doubled over the last one week and the trend is expected to continue. The effect of change in currency markets is almost immediate as most Indian expats are taking advantage of the situation by sending money back home," said Ashwin Shetty, vice-president of Global Treasury at UAE Exchange.
He added the volume of remittance to Indian markets had also surged by as much as 40 per cent.
"The first week of the month is usually a busy period for exchange houses. Most expats will be receiving their salaries over the next few days which would lead to a natural surge in money transfers," he added.
The rupee has lost 20 per cent of its value this year and is currently regarded among one of the world's worst-performing currencies. Financial analysts expect the rupee to bottom out at 70 against the US dollar.
"People have a tendency to wait in anticipation of a further fall in the currency value and then take advantage of the currency prices," said Shetty.
The Reserve Bank of India (RBI) and India's Finance Ministry are hoping some of the corrective measures including increased taxation and restriction on imports will show effect over the next few weeks.
However, the increase in remittances by non-resident Indians has been also credited to the festive season of Eid and the end of Ramadan.
Sobia Rahman, vice-president, Western Union (Pakistan, Afghanistan and Gulf), said, "Statistics have shown that during times of religious festivals and the holiday season, there is a noticeable rise in money transfers by migrants to their home countries and this Ramadan and Eid holiday was no exception.
"It is not unusual for expatriates, and others who regularly send money to react to changes in the exchange rates. However, since many people depend on remittances as a critical source of income, migrant workers will continue sending money home."
Indian rupee is facing increased pressure in light of a possible military strike against Syria as global oil prices have also seen an increase. The rise in dollar's overseas value has also been fuelled by speculation on the likelihood of US Federal Reserve's bonds buying programme from next month.
Global ratings agency Fitch has also warned of 'downgrading' India if the country is unable to meet the fiscal deficit.
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