Against the UAE dirham, the Indian rupee is expected to drop to 22.58 in the coming weeks, before rising, while the Philippine peso is expected to appreciate in value to 14.86. Also, the Pakistani rupee is set to slip to 61.91 by mid-December. 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 drop before rising, remit soon
The Indian rupee is expected to continue to hold its narrow trading ranges this week. The rupee ended unchanged at 81.6850 per US dollar last week. It was trapped in a narrow 81.44-81.9150 range despite a weaker greenback.
Against the UAE dirham, the Indian rupee is expected to drop to 22.58 in the coming weeks, before rising again, so remit soon to take advantage of rates.
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 expected to drop to 22.58 in the coming weeks, before rising again after, so remit soon to take advantage of rates.
"Markets are sensing a softening of approach from the US and that's giving legs to risk assets. That's expected to be supportive for the rupee and unless something changes, we will still be in a tight range of 81-81.80", a trader with a private bank said.
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, the trader added. 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.
For now, in the coming week, the currency is seen at around 81.50-81.55 per dollar, largely steady compared to recent levels. 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.
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.
In the coming week, however, the Indian rupee is expected to decline against the US dollar, tracking a broad decline in Asian currencies, before rising again.
Pakistani rupee to drop more, hold on remittance
In Pakistan, the buying rate of the US dollar was currently 225.37 Pakistani rupee (61.36 versus UAE dirham).
According to research, the Pakistani rupee value is expected to drop the most in value to 61.91 by the middle of next month against the UAE dirham. So hold off on remitting till then.
Exchange rate of the Pakistan rupee depreciated by 03 paisa against the US dollar in the interbank trading on Friday and closed at Rs223.94 against the previous day's closing of Rs223.91.
According to the Forex Association of Pakistan (FAP), the buying and selling rates of dollar in the open market were recorded at Rs228.75 and Rs231 respectively.
Philippine peso value to rise more soon, remit now
According to research, the value of the Philippine peso is expected to rise to 14.86 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 15.40. The peso slid more than 12 per cent this year against the dollar.
The Philippine peso, Southeast Asia's worst performer this year, has been rising against the dollar after BSP delivered a previously announced 75-basis-point key rate increase recently. The currency has gained more than 2 per cent this quarter, paring this year's losses.
The Philippine central bank will have to raise interest rates if the US tightens policy further to support the peso and prevent the currency's weakness from further stoking inflation, its governor said recently.
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.
The US is expected to deliver a smaller rate hike in December, but economists polled by Reuters see a longer period of tightening and a higher policy rate peak as risks to the current outlook.
"If the Fed does 50, we cannot have zero right? So the question is whether it's 25 or 50," BSP Governor Felipe Medalla told Reuters in a recent interview in Manila.
"If you have a scenario (where) the US will not hike anymore then I can tell you flat out, neither are we." BSP raised interest rates by 75 basis points last week, largely to match the US three-quarter point hike this month, and is expected to hike again in December.
- with inputs from Agencies