Dollar crashes to 3.5 year low - UAE expats need to plan when to send money next

Dubai: The dollar has dropped to a three-and-a-half year low and showing signs of further weakening, which will require many expats in the UAE to manage expectations on what they can get from sending money home.

Just three days ago, it was all looking so different for expats from Asia in the UAE and Gulf, with their currencies dropping against the dollar. For the Indian rupee and the Philippines peso, the drops as of Monday were their lowest points since April.

All that has changed. “If the dollar drops further, expats should think about sending only part of their next remittances due later this month or early next,” said a currency exchange house official.  

Many expats in the UAE had been waiting for their next salary getting credited, hoping that the stronger dollar of early this week would continue until month end. "They will be the ones bitterly disappointed with the dollar's fall - they have missed out on an excellent opportunity," said the currency exchange official.

Even yesterday, there were ample signs that the dollar was back to a softening, now that the ceasefire between Israel and Iran is holding. But that also means markets are again worrying about the US economy, the threat of US tariffs, and whether the US Federal Reserve will be cutting interest rates late July. (It has not helped that US President again talking about Fed Chair Jerome Powell and why he should be cutting rates faster…)   

Just look to the dollar index

“The dollar index has been on a fall since January 25 (when it was 110.17) and then slipped below 98 as ceasefire was announced between Iran-Israel,” said Subramanian Sharma, Promoter Director of Mumbai-based Greenback Advisory Services.

This morning, the dollar index – which is a measure of the dollar’s strength/weakness against a basket of currencies – has dropped all the way down to below 97. It is currently at 96.93.

In bthe last 7 days, the highest point was 99.18, which is when Indian expats were seeing exchange rates of 23.5 plus and it was 15.61 for Filipino expats.

Invest in alternate currencies?

According to a senior analyst at the trading platform IG, "Whether it’s high-risk currencies like the Australian and New Zealand dollars, oralternative safe-haven currencies such as the Swiss franc, the market appears to be favoring alternatives to the US dollar.

"That’s why we believe the dollar looks vulnerable, pressured by fading demand for safe havens and a growing dovish tone from Fed officials.

"More voices are now backing a July cut, citing weaker labor data and softer tariff-driven inflation. For now, any upside on the dollar index looks capped near 97.80, while downside risks may build as rate-cut bets grow.

"A clean break below 97 on the dollar index would be more than just a dip. It could mark the start of a broader retreat."

That's exactly what the dollar is facing right now.

For UAE expats, that would mean keeping close watch in the week ahead.