Dubai: Wealthy Indian expatriates are flocking to money exchanges to take advantage of the continued decline of the Indian rupee against the US dollar, exchange houses and currency specialists told Gulf News.
But experts say that the sudden depreciation of the Indian currency doesn't usually benefit the low-income or blue-collar workers who comprise the large segment of the remitting population in the UAE.
Poorer expatriates that have families to support back home are compelled to transfer funds abroad every month, regardless of the rise or fall of the rupee.
Sudhir Shetty, chief operating officer of UAE Exchange, said they have noticed an increase in transactions from the middle to high-income bracket.
"In the last week or so, we have seen increased activity happening in the large-ticket segment. These are from people who send money for investments rather than domestic commitments," Shetty told Gulf News.
Sobia Rahman, Western Union regional vice president for Pakistan, Afghanistan and the Gulf, said that many people depend on remittance as a critical source of income and migrant workers will continue sending money home, regardless of the exchange rate.
"Studies have shown that remittances are resilient and often counter-cyclical. On the other hand, some expatriates with regular savings in the UAE may consider sending their savings to benefit from the better exchange rate," Rahman said. Exchange rates for the Indian rupee against the US dollar have rapidly been approaching two-year highs. Experts say an aggressive flow of funds out of India into the US dollar has pushed the rates of exchange towards 49.0.
"This weakening of the Indian rupee has been a welcome turnaround for Indian nationals who earn money overseas. The sudden depreciation of their native currency has meant that it is beneficial to transfer any savings back home," said Chris Canning, currency analyst at First Rate FX.
The currency specialist, which has an office in Dubai but carries out trading for all currencies from the UK, has seen the amount of transactions buying Indian rupees almost double over the past two months.
The number of transactions from either the UAE dirham or the US dollar into the Indian rupee has increased almost 187 per cent in the past 50 days.
For UAE dirham to rupee fund transfers, the number of transactions increased by 37 per cent over the last two months. "This does not include US dollar transactions. This is much larger than normal rate fluctuations. We normally expect fluctuations of about 10 per cent to 15 per cent when there are large rate movements," Canning explained.
"The sudden increase in flows of savings and earnings into the Indian rupee show that Indian nationals want to benefit while the rate is so high. It also shows that they believe that it may not be too long before the rate begins to fall," he added.