Should expats in UAE remit? Indian rupee to weaken, while Pakistani rupee, Philippine peso expected to rise

Dubai: Remittances from the UAE were seeing an uptick as several, particularly South Asian currencies, lost a bit of momentum and recorded remittance-beneficial rates in the past few weeks. But will the currency trend continue?

Not for all currencies. The Indian rupee is expected to weaken in the coming weeks, while the Pakistani rupee and the Philippine peso are expected to strengthen. Here’s how you can take advantage of these remittance-beneficial rates and when. Check the latest forex rates here.

Will currency back home rise or fall?

When it comes to sending money back home, it is vital to know whether it is currently an ideal time to remit. To understand whether it is or isn’t, one should first find out if your currency back home is expected to rise or fall in the days to come.

Here is an analysis of how the aforementioned currencies have been performing and expected to perform in the coming week, to help understand whether remitting money now is profitable or cost-effective, or should you wait it out for a few weeks for a better rate to come along.

If a currency is expected to weaken or depreciate, like the above-mentioned currencies in this instance, it's prudent to take advantage of more remittance-friendly rates after it drops further, rather than now. On the other hand, when it comes to currencies that are expected to appreciate in values, it would be cost-effective to remit now, as the rates would only rise over the near term.

Indian rupee value to drop more soon, hold remittance

Down over 10 per cent against the dollar this year despite the central bank burning through its dollar reserves to support the currency, the rupee will trade at 82.5 per dollar in three months, near where it was on Tuesday, according to the October 28 to November 1 Reuters poll of 26 forex analysts.

Any weakness or strength in the Indian currency's value against the US dollar will be automatically reflected in its exchange rate with the UAE dirham as the UAE currency is pegged to the dollar. Against the UAE dirham, the Indian rupee is expected to drop to 22.83 in the coming weeks.

If the rupee hits 85 to a dollar by December, it would have lost 12.5 per cent this year - the steepest decline in a decade. While the Reserve Bank of India has stepped in regularly to smoothen the rupee's drop, analysts said the intervention is depleting the foreign exchange pile at a robust pace.

With the rupee witnessing a downward spiral for the past several weeks, even crossing the 83 mark against the US dollar, RBI Governor Shaktikanta Das on Wednesday said that the Indian currency has behaved in an orderly manner and its trajectory shouldn't be looked at emotionally.

India's central bank is likely to loosen its recent grip over the rupee, analysts at Citigroup Inc. and Barclays Plc said, leaving the local currency vulnerable to plumb fresh lows against the almighty dollar.

India's rupee will recoup only some of its recent losses against the dollar over the coming year as the interest rate gap is set to widen further alongside a worsening current account deficit, according to a Reuters poll of FX strategists.

The currency has declined in every month this year - its longest losing streak in almost four decades - as the US Federal Reserve has adopted far more aggressive policy tightening than its peers, including the Reserve Bank of India, boosting the greenback to two-decade highs.

With more hikes to come from the Fed, including a likely fourth straight 75-basis point hike later on Wednesday, and the RBI expected to be tamer, the policy divergence will probably expand further. That means no respite for the sinking rupee at least in the near term.

So will the currency decline in the weeks to come?  Research indicates that the currency will drop, given that the US dollar is seen strengthening in the weeks to come.

Pakistani rupee to rise more by month-end, remit soon

In Pakistan, the buying rate of the US dollar was currently 221.78 Pakistani rupee (60.38 versus UAE dirham).

According to research, the Pakistani rupee value is expected to appreciate the most in value to 55.84 by the start of next month against the UAE dirham.

Pakistani rupee on Tuesday appreciated by 24 paisa against the US dollar in the interbank trading to close at Rs220.64 against the previous day's closing of Rs 220.88.

According to the Forex Association of Pakistan (FAP), the buying and selling rates of US dollar in the open market were recorded at Rs224.5 and Rs226.5 respectively.

Philippine peso value to rise more soon, remit now

According to research, the value of the Philippine peso is expected to rise to 15.56 against the UAE dirham by the start of next month - making it more cost-effective to send money now. Against the UAE dirham, the peso was currently at 15.89.

The peso slid more than 12 per cent this year against the dollar. Bangko Sentral ng Pilipinas' participation in the currency market is limited to tempering the exchange rate's sharp moves, it said in a statement Wednesday. The monetary authority "does not target nor avoid any level of the peso and does not alter currency trends."

The Philippine peso's drop is neutral for the nation's credit rating if inflation is contained and foreign-exchange reserves remain ample, according to Fitch Ratings.

"Peso depreciation itself is broadly neutral for the rating, if the authorities can find a policy mix that contains medium-term inflationary pressures without choking off growth or burning up FX reserves trying to stave off peso depreciation," said Krisjanis Krustins, a Hong Kong-based director at Fitch.

- with inputs from Agencies