Dubai: Remittance transactions from the UAE to India are expected to spike again, with the South Asian currency tumbling to a new record low on the first trading day of the week.
The Indian rupee fell to 69.62 per US dollar in early trade and industry sources said it looks like the weakness is going to continue this week.
In Dubai, the rupee opened at 18.83 to a dirham and slumped further to 19.06 as of 5.29pm. Historical data from fxexchangerate.com showed that this week’s opening rate for the rupee is the lowest since August 13, 2017.
"The Indian rupee has been on the decline for a few months and plunged to its lowest against the US dollar today," Promoth Manghat, CEO of UAE Exchange Group, told Gulf News.
“This is the lowest so far. In August 1, the rate was only 18.59. The rupee has been weak and there’s a chance it will continue to fall further,” a source from an exchange house in Satwa told Gulf News.
“With this trend, I think there will be an increase in remittance transactions, although some of our customers are waiting for the rupee to fall further,” he added.
The rupee’s weakness has been due to worries over the Turkish crisis. The lira has recently plunged, sending currencies in the emerging markets to low levels.
The Turkish currency has dropped about 45 per cent against the US dollar this year due to concerns over President Tayyip Erdogan’s increasing control of the economy and a worsening diplomatic row with the United States.
“The decline comes as the Turkish lira weakened sharply against the dollar, putting all emerging market currencies in a state of flux,” Manghat said.
“The weakening of the Turkish lira, due to the political unrest in the country, has put the emerging market currencies under pressure, which is why we are witnessing this sudden decline,” added Sudhesh Giriyan, COO of Xpress Money.
“In addition, there are increasing concerns in the market regarding the widening trade deficit of India, which has added to the pressure on the foreign exchange reserves of the country.”
The UAE's exchange houses are expecting the rupee’s decline to boost remittance transactions to India. The weaker the rupee gets, the more money Indian nationals in UAE can send back home.
"Non-resident Indians can make the most of the currency decline as they can avail [themselves of] better exchange rates while sending money back home. If this trend continues, we expect to see a surge in remittances in the next few weeks," said Giriyan.
“Remittances to India have been on the higher side over the past few months due to the volatility in the Indian currency and are subject to further increase, leading to remitters getting more value for every dirham they send,” added Manghat.
With additional inputs from Reuters