People transfer money at UAE Exchange in Sharjah. Image Credit: Ahmed Ramzan/Gulf News

Dubai: Indian expatriates who are just about to send money home are in for a good windfall, with the Asian currency now at a one-year low against the US dollar.

The rupee fell to its lowest level since February 2017 against the greenback on Monday, owing to higher oil prices and capital outflows.

As of Monday afternoon, the rupee stood at 18.27 against the UAE dirham and 67.10 against the US dollar. “[It’s] the lowest it has been in more than a year,” Sudhesh Giriyan, COO of Xpress Money, told Gulf News.

The currency started showing signs of weakness in mid-April. The weakening of the rupee can be attributed to rising crude oil prices, widening trade deficit and higher capital flows.”

India has been the biggest beneficiary of remittances from expatriates around the world, receiving $69 billion (Dh253 billion) out of the $466 billion funds sent home last year by migrants worldwide. That’s a 9.9 per cent increase over the previous year, when money transfers to the Asian country witnessed a sharp decline.

With the dirham pegged to the American currency, a higher US dollar means stronger remittance power for expatriates based in the UAE.

“The weakening of the rupee this year will only boost the remittances to India. We expect to see Indian expats in UAE taking advantage of the situation as they can get more value for every dirham they remit,” added Giriyan.

According to Promoth Manghat, CEO of UAE Exchange, the Indian currency had been fluctuating for the past few weeks before it plunged to its lowest level on Monday. He said the latest rate is the lowest since February 2017.

“This unexpected depreciation of the Indian rupee could be attributed to the rising yields on US Treasury and oil prices in the Middle East,” Manghat told Gulf News.

“We believe that with the current favourable economic conditions and with the onset of Ramadan, remittances from the Indian diaspora will continue to be high in the next few months.” 

Rajiv Raipancholia, treasurer for the Foreign Exchange Remittance Group (Ferg), said Indian expats had already started remittng money when the rupee crossed 18 against the dirham.

"More big-ticket remittances are expected with the rupee crossing 67 against the dirham. At the same time, the rising crude price and strength of US dollar overseas may lead to further fall in Indian rupee."