Dubai: 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.
Remittances from the UAE are in for a sharp surge as several, particularly South Asian currencies, were seen losing ground in the weeks to come. Currency analysts evaluate that flow of foreign currencies has improved after the worst of the pandemic had passed with the majority part of 2020.
According to statistics, South Asians, which – among others – include people from India, Bangladesh, Pakistan and Philippines, and make up nearly 60 per cent of the UAE population. So it would be financially beneficial to regularly analyse currencies of the above countries, be it the Rupee, Taka or Peso.
So here is an analysis of how these aforementioned currencies have been performing, and expected to perform in the coming weeks, to help understand whether one should consider remitting money now is profitable or cost-effective, or wait it out for a few weeks for a better rate to come along.
Where is the India Rupee headed in April?
With the Indian rupee currently below 20 to the UAE dirham, the Indian rupee advanced to 72.34 against the US dollar (19.71 versus UAE dirham) on Tuesday.
It was in April-end last year that the rupee dropped to its lowest point. It was at 76.8 on April 16, and on April 22 it briefly tested 76.90. It has been strengthening since then, when it was trading at 21.07 against the UAE dirham, gain over 6 per cent in nearly a year.
According to research, the Indian rupee is expected to average between 19.63-19.7 against the UAE dirham in the remaining few days of March. However, towards mid-April, rates are seen dropping to as low as 19.3, before rebounding back slightly above 19.5 by the end of the month.
Pakistan Rupee is seen dropping next month
In Pakistan, the buying rate of the US dollar was 155.8 Pakistani rupee (42.45 versus UAE dirham), while it was sold at Rs156.5 (42.64 against the UAE dirham) on Tuesday, before the markets shut on account of Pakistan Day.
According to research, the Pakistani rupee is expected to drop to 42.1, from the current 42.5 against the UAE dirham in the remaining few days of March – after momentarily spiking during the weekend.
The rate is expected to hover at the lower level of 42.1 during the first week of April, but rates are seen dropping even further to as low as 41.5 by the end of the month. During the last two weeks of April, the Pakistani Rupee will mostly average between 41.9 and 41.6, before ending the month low.
Global ratings agency Fitch Solution predicts the Pakistani currency to average weaker at Rs171.15 for every US dollar in 2021 citing higher structural inflation in the US.
Where is the Philippine Peso headed in the weeks to come?
According to research, the Philippine Peso is expected to average between 12.9-13.1 against the UAE dirham over the next one month, with no major fluctuations seen – making it ideal to send money any time over the next coming weeks.
The average exchange rate against the UAE dirham in March will be 13.23, with the currency slipping just 0.3 per cent in the month. Over the month of April, rates are expected to stay largely the same at the end the month while the exchange rate averages at 13.25.
However, during the following months of May and June this year, rates are expected to spike about 1.4 per cent to over 13.43. So, it would be cost-effective to remit during the preceding months.
What about other South Asia currencies?
When analysing other South Asia currencies, even the Nepalese currency, which remains pegged to the Indian Currency since 1994, has been falling. Pakistan’s currency is depreciating post-IMF bailout of 2019.
With the worst performing currencies in the entire Asian region, it can be ascertained that some South Asian currencies are getting weaker with respect to the standard US dollar. When analysing exchange rates for Bangladesh Taka against the UAE dirham, rates averaged at 23.1 over the last 180 days.
Most emerging Asian currencies are currently witnessing slightly lower rates, as risk appetite was sapped by a slump in Turkey's lira.
Turkey's lira recovered partially to 7.8 against the US dollar, after sliding 15 per cent to near its all-time low in early trade in reaction to weekend political decisions.
The Indonesian rupiah and the Thai baht weakened 0.2 per cent against the US dollar, while the Philippine peso and Malaysian ringgit dropped 0.1 per cent each.
Bucking the trend, South Korean won strengthened slightly after preliminary data showed the country's exports during the first 20 days of March jumped 12.5 per cent from a year earlier.
Although there still some persisting weakness among other Asian currencies, the weakness is not expected to last for long. So the impact of the tumbling lira will be muted as analysts flagged a limited contagion effect in the region.
Citi Research analysts pointed that the last lira slide in value between August and early November last year was not accompanied by a generalised emerging forex sell-off.
