Against the UAE dirham, the Indian rupee is expected to drop to 23 in November, while the Philippine peso is expected to depreciate in value to 16.54. However, the Pakistani rupee is set to drop to 61.16 by month-end, before strengthening much to 55.42 next month. Here's how you can take advantage of these upcoming rates.
Dubai: Remittances from the UAE were seeing an uptick as several, particularly South Asian currencies, lost a bit of momentum and recorded remittance-beneficial rates in the past few weeks. But will the currency trend continue?
Evidently, yes. The Indian rupee and the Philippine peso are expected to weaken in the coming weeks, while the Pakistani rupee is expected to strengthen next month. Here’s how you can take advantage of these remittance-beneficial rates and when. Check the latest forex rates here.
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 week, 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.
If a currency is expected to weaken or depreciate, like the above-mentioned currencies in this instance, it's prudent to take advantage of more remittance-friendly rates after it drops further, rather than now. On the other hand, when it comes to currencies that are expected to appreciate in values, it would be cost-effective to remit now, as the rates would only rise over the near term.
Indian rupee value to drop more next month, hold remittance
US investment giant Citigroup Inc expects the rupee to push to 85 to a dollar, while UK's key lender Barclays Plc says that the risk of a short-term overshoot to 84-85 is high. Global bank Standard Chartered Plc has also extended its long dollar/rupee trade target to 85 after the local currency breached 83.
The currency has been hitting a series of lows, pushing past 83 to a dollar on Wednesday, making it one of the worst performers in Asia over the past month. It fell to an all time low of 83.29 on Thursday, before recouping the day's losses on suspected central bank dollar sales.
Any weakness or strength in the Indian currency's value against the US dollar will be automatically reflected in its exchange rate with the UAE dirham as the UAE currency is pegged to the dollar. Against the UAE dirham, the Indian rupee is seen touching 23 as early as the first week of November, if the central bank doesn't intervene further.
If the rupee hits 85 to a dollar by December, it would have lost 12.5 per cent this year - the steepest decline in a decade. While the Reserve Bank of India has stepped in regularly to smoothen the rupee's drop, analysts said the intervention is depleting the foreign exchange pile at a robust pace.
India's central bank is likely to loosen its recent grip over the rupee, analysts at Citigroup Inc. and Barclays Plc said, leaving the local currency vulnerable to plumb fresh lows against the almighty dollar.
"RBI is likely to dampen the volatility of USD/INR still, but hurdle for drawing lines in the sand may get higher and higher, especially with valuation losses taking a toll on reserves and optics of reserve coverage ratios deteriorating," Citi analysts Gaurav Garg and Gordon Goh wrote in a note.
The Indian central bank likely sold dollars via state-run banks on Thursday after worries pushed the currency to a record low, traders told Reuters. "The intervention was quite aggressive," a trader at a private sector bank told Reuters. "Think the intention is to make sure rupee closes above 83."
So will the currency decline in the weeks to come? Research indicates that the currency will drop, given that the US dollar is seen strengthening in the weeks to come.
Pakistani rupee to drop more by month-end, remit soon
In Pakistan, the buying rate of the US dollar was currently 221.14 Pakistani rupee (60.21 versus UAE dirham).
According to research, the Pakistani rupee value is expected to depreciate the most in value to 61.16 by the end of the month against the UAE dirham, before strengthening to 55.42 in November.
Pakistan rupee on Wednesday depreciated by another Rs1.16 against the US dollar in the interbank trading to close at Rs220.87 against the previous day's closing of Rs219.71.
According to the Forex Association of Pakistan (FAP), the buying and selling rates of the dollar in the open market were recorded at Rs225.7 and Rs228 respectively.
Philippine peso value to drop more next month, hold remittance
According to research, the value of the Philippine peso is expected to drop to 16.54 against the UAE dirham next month - making it more cost-effective to send money later. Against the UAE dirham, the peso was currently at 16.01.
Meanwhile, the peso dropped to 59 on Thursday, a record low against the US dollar or greenback that has now held for more than three weeks. The currency has slumped more than 13 per cent this year.
"With the dollar below its recent highs, it allows the central bank to draw a line in the sand at 59 per dollar for now," said Eugenia Victorino, head of Asia strategy at Skandinaviska Enskilda Banken AB in Singapore. "But a fresh leg up in the dollar can easily lead the peso to breach 60, a key psychological level for the general public."
As the US dollar's unrelenting strength pummels its global peers, traders are focusing on specific levels that might prompt greater central bank intervention, analysts currently evaluate.
- with inputs from Agencies