As rupee drops to 23.8, why are UAE's Indian expats shopping for 'best remittance deals'?

Dubai: The latest decline in the Indian rupee to 23.8-23.9 against the dirham has once again brought currency exchange rates and remittance fees a hot topic among Indian expats in the UAE.

Based on trends from the last 3-4 days:

* UAE based currency exchange houses were offering dirham to rupee exchange rates of 23.7 to 23.75 for one dirham.

* Banks in the UAE had remittance rates pegged at 23.6 to 23.65 during the same period.

* Digital apps were offering remittance services at 23.83 to 23.88.      

Now, it has always been the case that there are differences in the actual remittance rates charged by the three – banks, currency houses and fintechs.

But this time, such was the drop in the Indian rupee that it became significant for Indian expats to get as much out of each dirham as possible.  “There were a lot of NRI customers who were asking us about why there is this variance in offered exchange rates,” said a manager with a currency house. “Much more than is the case usually.”

Which also led to more Indian expats switching to alternate platforms to ensure they got the ‘best rate’.

The Indian rupee fell on Wednesday last when the US President said there will be an additional 25% tariffs on Indian imports into the country. This was because India keeps buying oil from Russia, more so because it gets it cheaper than the average oil prices in the global market.

This is when the rupee slipped to 23.91-23.92 levels and looked like it would go past the lowest ever point of 23.94. And with a strong possibility of hitting 24.

So far, that hasn’t happened. The Reserve Bank of India did enough activity in the currency market to shore up the rupee, and by Friday evening, it was at 23.85.

Since the start of August, ‘the dirham to rupee remittance flows have been among the highest recorded’, according to exchange company officials.

"From the final days of July to now, the rupee has been trading at the lowest exchange rates to the dirham and dollar. We expect the same levels in the coming days."

As exchange rates turn extra volatile, for expats in the UAE and Gulf, the cost of remittance charged by the various service providers is the other detail remitters must look into.

Based on current fee structures:

* Banks charge Dh20 to Dh25 per transaction.

* Currency exchange houses haves fees of Dh15 to Dh20.

* Digital remittance platforms charge Dh5 to Dh10.

Even here, there are well-timed 'special deals' available. Recently, when the Indian rupee was firming up against the dirham, the digital platform e& money cut it 'per transaction' fees to get remitter attention.

According to industry sources, while there are fewer 0% fee offers available, there are still offers that can 'lower the fee costs for remitters in the UAE'.

Even banks are not holding back when it comes to carving out market share in the high volume remittance game.

"We have some packages where the remitter is allowed free remittances up to a certain amount - or on a certain number of transactions," according to a top official with a leading UAE bank.

"As a mainstream bank, if I have your salary account, I need to make sure I cater to all your domestic payments - and all your international payments.

"What we are telling customers is don't just go by zero fees. Because someone can give you zero fees and put 5% margin on the actual conversion rates between the dirham and the rupee.

"The best way to retain customers on remittances is to offer the most competitive rates - and the most consistent services."