Abu Dhabi: The rupee’s unprecedented fall against the US dollar and, consequently, the UAE dirham due to the Gulf country’s dollar peg, has driven the expatriate Indian community to remit funds home from their local savings at the earliest available opportunity in order to reap the windfall gains.
The rupee has slumped more than 17 per cent this year as India’s rising current account and fiscal deficits have spooked foreign institutional investors. These investors have been pulling their money out of the country’s stock and debt markets. Since June 1 — after the US Federal Reserve signalled there would be a tapering of its $85 billion (Dh312 billion) emergency bond buying programme later in the year — the overseas funds have pulled as much as $11.36 billion from India, thereby exerting greater pressure on the rupee and stoking hyper-inflation fears in the country.
The rupee crashed to an all-time low of 64.62 to the US dollar last Wednesday and 17.5932 to the dirham a day before. Analysts say it may go down even further in a month’s time to about 70 to the dollar.
“I have been remitting funds to India regularly. This is the best time to send money to India as I believe the Indian government will take measures soon to arrest the currency’s decline. I don’t expect the rupee to fall further,” Abu Bakr, a long-tem UAE resident and senior manager at Abu Dhabi-based Lifeline Group, a pharmaceutical distribution company, told Gulf News.
Balram Sankar, a legal consultant in Abu Dhabi, said he will wait for another three to four days to transfer funds home as he anticipates the rupee will decline further.
He said there are people who are “maxing out” their credit card limits, going to jewellery shops and getting cash from them for a small fee against which a credit card bill is generated.
The person doing the transaction on the credit card gets 45 days to pay back the money — interest free, so it becomes a win-win situation for him.
“There are gains to be made on the market,” said Sankar.
Dubai-based businessman Kamal Vachani, who runs the Al Maya chain of supermarkets, said he will wait until the end of the Indian elections scheduled for next year to make any remittances to India.
“I am holding back right now. The rupee is in a freefall and has taken everyone completely by surprise,” said Vachani.
Refai Kallai, managing director at Asaq Al Khaleej Engineering Resources in Abu Dhabi, said he will wait and watch the rupee’s movement before making any decision on remitting funds to India.
However, Vijay Kumar, a labourer who makes a paltry Dh800 a month, said he has fixed expenses back home to meet his family needs and irrespective of the currency’s movement, he remits Rs10,000 a month.
“I do it every month as soon as I receive my salary,” said Kumar.