Dubai: Expatriates in the UAE who have saved enough dirhams for remittance are in for higher windfalls, as the US dollar has climbed to its highest level in six years against a number of currencies, including the Philippine peso and Indian rupee.
On Thursday, the Philippine currency reached 50 to the dollar, which was last recorded in 2008 during the global recession, while the rupee fell to a record low of 68.86. In the UAE, one dirham is now worth about 13.6 pesos and 18.7 rupees.
A rise in the US dollar is good news for expatriates in the UAE, given that the local currency is pegged to the greenback. Most expatriates set aside a portion of their monthly income for remittance. They keep track of currency fluctuations on a regular basis and time their remittance when rates are favourable.
“This makes me happy since I intend to send money home in time for Christmas,” said Mary, an expatriate from the Philippines.
Foreign workers in the UAE send about $19 billion (Dh70 billion) to their home countries in one year, making the UAE the world’s fourth top remittance-sending country. As of 2014, the aggregate outflows accounted for 4.8 per cent of the UAE’s gross domestic product (GDP), according to World Bank data.
The greenback’s recent rise is expected to continue, with the US Federal Reserve likely to increase the interest rates in December. “Dollar bulls remain in control,” noted Kathy Lien, managing director of FX strategy for BK Asset Management.
However, some analysts are speculating that the dollar bull will not last beyond January 2017.
“Into 2017, we are still not convinced that… the dollar will move much higher beyond January,” noted Ole Hansen, head of commodity strategy at Saxo Bank.
However, a stronger dollar is not good for emerging markets like Asia.
“A stronger dollar and higher US Treasury yields are leading to capital outflows leading to tighter financial conditions,” noted Nick Kounis, head of macro research at ABN Amro.