UAE money transfers to UK, Europe - time it right, save big in November
Sending money from the UAE? Get the best exchange rate, here's how to
Highlights
Against the UAE dirham, the British pound and the euro are expected to weaken in the coming weeks from its present levels. Here's how you can take advantage of these upcoming rates when remitting money to the UK or anywhere in Europe.
Dubai: Thinking of sending some cash to the UK or anywhere in Europe? Hold on to your dirhams! Just like booking a flight, timing your money transfer can save you some serious money.
The first step is figuring out if the currency in the country you are remitting to is going to rise or fall in value soon? This can make a big difference in how much money your friends or families end up receiving after you send.
Gulf News analysed currencies like the British pound and the euro to see if a money transfer is now a win or a wait-it-out situation. While these currencies are less prone to fluctuations than some South Asian ones (think Indian rupee, Pakistani rupee, and Philippine peso), even small changes can add up to big savings when you're sending a hefty chunk of change.
Currency on the rise? Send now and save! On the flip side, if your home turf's currency is getting stronger, don't delay! The exchange rate will only go up, so remitting now saves you money in the long run.
Postpone British pound remittances?
“The British pound (GBP) or Sterling’s exchange rate has been largely unchanged since the year began, which would have steadily stagnated remittances and overseas transactions,” explained Amit Trivedi, UAE-based forex analyst and trader.
“However, the pound dropped on Wednesday after data showing British inflation slowed more than expected in September, making it easier for the Bank of England to cut interest rates further this year. This is why the pound is expected to get more remittance-friendly in the coming weeks.”
Another reason analysts are flagging the pound may soon find more room to drop in value against the US dollar is because the dollar is seen rising after new data highlighted the resilience of the US economy and led investors to rein in major rate cut bets. The pound is currently at 0.77 against the dollar.
“Similarly, against the UAE dirham – which is pegged to the US dollar, the pound value is seen dropping from its current level of 0.209, which implies that you should postpone your remittances to get more value for your dirhams when remitting overseas,” added Trivedi.
“With the British Sterling’s potential drop against the US dollar, investors will put off investing in UK shares or stocks, which are mostly dealt in the strong US dollar,” noted Anil Pillai, an Abu Dhabi-based banking analyst specialised in forex payments.
“Moreover, cash deposit rates in the UK have started to dip to 4.75 per cent from 5 per cent. But with the UK economy showing that it can take on more rate cuts, markets will soon get more good news on not just near-term currency values and forex rates, but also deposit rates.”
Declining euro to aid UAE remittances?
Against the US dollar, the euro exchange rate has dropped in value against the US dollar since the start of the year, analysed Trivedi. It is at 0.92 versus the US dollar currently. But what will forex rates look like next month?
“The decline of the euro in recent months encouraged people to remit overseas. With the euro’s fortunes not looking to change against the strengthening US dollar on account of more looming rate cuts, better remittance rates can be taken advantage in the weeks ahead,” said Trivedi.
“Drastic US rate cuts widen the interest rate gap between the US and the Eurozone, but more rate cuts in Europe will put reverse pressure on the euro versus the dollar,” Pillai agreed, which is in line with the recent forecasts from top investment banks worldwide as well.
“In other words, although the euro will edge down in value, declines will be restricted. This will be reflected against the UAE dirham as well. But that won’t affect remittance plans of expats as it will only get more cost effective to remit and take advantage of the rates in the weeks to come,” Trivedi added.
Bottom line?
When it comes to remitting the euro or the British pound in November, remittance-friendly rates will make it easier for expats to remit more and earn more bang for their bucks. This should provide UAE-based expats clarity on how they should plan their upcoming remittances to UK or anywhere in Europe.