UAE expats: Time to remit? Pakistani, Indian rupee to weaken in November, Philippine Peso to slip slightly

Dubai: Remittances from the UAE are seeing an uptick as several, particularly South Asian currencies, were losing ground and recorded remittance-beneficial rates on an average in the past weeks. But will the currency trend continue? Estimates show Philippine Peso, Indian Rupee and Pakistani Rupee weakening in the weeks to come.

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 weeks and month, 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.

Indian Rupee value to strengthen by mid-November before weakening by month-end

With the Indian Rupee (INR) currently at 20.4 to the UAE Dirham, the Indian Rupee last strengthened to 74.93 against the US dollar.

According to research, the Indian Rupee (INR) is expected to drop to 20.2 by the middle of next month against the UAE Dirham, before it ends the month at 20.7 – a comparatively more remittance-beneficial rate.

So it is financially prudent to remit at the end of next month, as you will get comparatively more Indian Rupees (INR) for your UAE Dirham’s worth by November-end. These month-end rates will stay low in December before steadying in January at 20.3, current estimates revealed.

Analysis show rates will stay between 20.4 to 20.75 during the rest of 2021, indicating the next two months will be the most cost-effective time to remit. As of now, rates are not expected to stay remittance-beneficial during the start of next year.

Pakistani Rupee value seen weakening in the coming weeks

In Pakistan, the buying rate of the US dollar was currently 172.15 Pakistani Rupee or PKR (46.87 versus UAE Dirham).

According to research, the Pakistani Rupee (PKR) is expected to dip to 47.16 by the end of November, from the current 46.87 against the UAE Dirham. Rates will strengthen before steadily rising through the month of November, before ending the month at 47.16.

During the last two weeks of November, the Pakistani Rupee (PKR) is expected to average between 47.14 and 47.16, making it an ideal and the most profitable and cost-effective time to remit.

The rates are expected to slip in November, and drop even further in December, ranging between 46.7 and 47.94 respectively, before the value of the Pakistani Rupee (PKR) plunges in January, 2022, by Rs1.

Where is the Philippine Peso headed in the weeks to come?

According to research, the Philippine Peso (PHP) is expected to steady at 13.7 against the UAE Dirham over the next 30 days – making it ideal to send money over the next coming weeks.

The rates are expected to slip slightly in November to 13.8, and drop even further in December, ranging between 13.7 and 13.9 respectively, before the Philippine Peso (PHP) rises in January, 2022, to about 14.

The average exchange rate against the UAE Dirham in November will be 13.68, with the currency falling 1.7 per cent in the month. Over the month of December, rates are expected to bounce back, rising 1.2 per cent, with the exchange rate averaging at 14.08. In January, rates are currently expected to be 13.98, staying more or less at the same rate as the previous month.

However, as rates are expected to weaken further during the starting months of next year, it would be more cost-effective to remit during those months. The Philippine Peso (PHP), which is currently 13.76 against the UAE dirham, dropped 1 per cent during the last quarter.

What are the factors triggering these currency movements?

The value of a country's currency is linked with its economic conditions and policies.

The value of a currency generally depends on factors that affect the economy such as imports and exports, inflation, employment, interest rates, growth rate, trade deficit, performance of equity markets, foreign exchange reserves, macroeconomic policies, foreign investment inflows, banking capital, commodity prices and geopolitical conditions.

Looking ahead the currencies are likely to remain under pressure on rising crude prices and relative strength of the US dollar in the forex markets. A possible decline against the dirham is a reflection of the decline of the currencies' fall against the US dollar on which the UAE currency is pegged. However, if the US Dollar weakens, as some analysts predict as much, the trends will reverse.

Despite the uptick in oil prices, uncertainties loomed as the market came under renewed pressure. Oil prices are currently struggling to break out of current ranges this year as the Organisation of the Petroleum Exporting Countries, Russia and their allies, known as OPEC+, may have no alternative but to extend deep production cuts to support the market. The OPEC and its allies have thus far taken a gradual approach to increasing supplies.

The world's third-biggest oil consumer, India, is concerned about domestic price pressures, with the nation expecting fuel consumption to return to pre-pandemic levels by the end of this year.

In a nutshell, looking at the potential fluctuation in the US Dollar demand in months ahead, South Asian currencies could experience similar volatility in the months ahead as well.