Against the UAE dirham, the Indian rupee is expected to drop to 22.99 in the coming weeks, while the Philippine peso is expected to appreciate in value to 14.46. Also, the Pakistani rupee is set to slip to 62.04 by the end of January, 2023. 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?
Not for all currencies. The Indian rupee and the Pakistani rupee are expected to drop in the coming weeks, while the Philippine peso is expected to strenghten. 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 to start 2023 lower, remit soon
Against the UAE dirham, the Indian rupee is expected to drop to 22.99 in the coming weeks, before rising again, so remit soon to take advantage of rates.
The rupee finished last week higher at 82.67 per US dollar. Traders expect the currency to move in the 82.70-82.20 range for the week.
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.
The Indian rupee is expected to open lower against the US dollar, UAE dirham after robust US data signalled that the world's largest economy was likely to keep interest rates higher for longer - with other key economies expected to follow suit.
Futures are expecting US rates to peak at below 5 per cent around the middle of next year before moving lower. In contrast, US central bank officials have indicated no rate cuts next year and a higher terminal rate. The GDP data could veer the markets nearer to the US stance.
The bias is towards the rupee appreciating in the long run, but dollar buying could once again limit gains, and the downside risk will come from surprises in economic data reports. Down over 10 per cent against the dollar this year, the rupee will trade at 82.5 per dollar in three months, according to recent Reuters poll of 26 forex analysts.
The currency has declined every month this year - its longest losing streak in almost four decades - after the US adopted far more aggressive policy tightening than its peers, including the Reserve Bank of India, boosting the greenback to two-decade highs.
Pakistani rupee to drop more, hold on remittance
In Pakistan, the buying rate of the US dollar was currently 226.25 Pakistani rupee (61.60 versus UAE dirham).
According to research, the Pakistani rupee value is expected to drop the most in value to 62.04 by the end of next month against the UAE dirham. So hold off on remitting till then.
The exchange rate of the Pakistan rupee depreciated by 22 paisa against the US dollar in the interbank trading on Friday and closed at Rs 225.64 against the previous day's closing of Rs 225.42.
According to the Forex Association of Pakistan (FAP), the buying and selling rates of dollar in the open market were recorded at Rs232.5 and Rs234.7 respectively.
Philippine peso value to rise more soon, remit now
According to research, the value of the Philippine peso is expected to rise to 14.46 against the UAE dirham in the coming weeks - making it more cost-effective to send money now. Against the UAE dirham, the peso was currently at 15.02.
Although the peso slid more than 12 per cent this year against the dollar, the currency is currently heading for its best quarter in 15 years but when looking at 2023 as a whole, analysts evaluate how the bulk of its rally may already be over.
The peso has surged about 6 per cent this quarter, advancing along with most of its emerging Asian peers as the dollar has weakened. The currency appreciated to 55.16 per dollar on Monday, the strongest level since August.
Bangko Sentral ng Pilipinas has raised interest rates by 300 basis points this year to curb inflation, running near 14-year highs, and support the peso which has fallen sharply against the dollar, underpinned by aggressive US monetary tightening.
One factor that may limit further the currency's gains is runaway inflation. The consumer price index jumped to 8 per cent in November from a year earlier, the highest level in 14 years.
"The peso will likely come under pressure again in the first quarter," said Ashish Agrawal, head of foreign-exchange and emerging-market macro strategy research at Barclays Plc in Singapore.
The peso is also starting to look overvalued compared with its regional peers. The currency's real effective exchange rate is 1 per cent above its five-year average. In contrast, similar gauges for the Indonesian rupiah, Thai baht and Malaysian ringgit are all at least 4 per cent below.
- with inputs from Agencies