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, no. The Indian rupee and the Pakistani rupee are expected to strengthen now in the coming weeks. Here’s how you can still take advantage of remittance-beneficial rates despite the rise. 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 rise more soon, remit now
The Indian currency had weakened over 10 per cent this year, with the central bank defending the rupee via dollar sales that have depleted its forex reserves to $545 billion from the peak of $642 billion a year ago.
Against the US dollar, the rupee closed at 82.3125 on Tuesday, compared to its previous close of 82.32 on the Reserve Bank of India's likely interventions amid risk aversion stemming from US rate hike fears and escalating geopolitical tensions.
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 RBI is trying to protect the 82.40-per-dollar level, otherwise it would've been at 82.80," said Sajal Gupta, head of forex and rates at Edelweiss Securities. The intervention is a way to protect inflation from rising in the country, Gupta said.
A weaker currency results in imported inflation through the purchase of goods at higher prices. Market participants were unsure how long the RBI could keep intervening, as they see high chances of the rupee weakening to 83, and even breaching it, by the Fed meeting next month.
NRIs are evidently sensitive to India's fundamentals and could be persuaded to deposit their dollars in India at attractive rates now, analysts evaluate. But will the currency rise in the weeks to come? Research indicates that the currency value will strengthen, given that macro tensions are easing.
Pakistani rupee value to strengthen, remit now
In Pakistan, the buying rate of the US dollar was currently 217.09 Pakistani rupee (59.10 versus UAE dirham).
According to research, the Pakistani rupee value is expected to appreciate the most to 53.82 in the coming weeks against the UAE dirham, from the current levels.
The currency is continuously gaining strength against the US dollar for past over-two weeks, making it best-performing currency. Even on Monday, the Pakistani rupee appreciated by Rs1.96 against the US dollar in the interbank trading and closed at Rs217.96 against the exchange at Rs219.92 on last trading day.
A strategy adopted by the finance minister went well with the currency market and lifted rupee from worst-performing in emerging markets in the third week of September 2022 to best-performing currency on last trading day of the previous week (October 7), in just around 18 days, forex analysts evaluated, while adding that prudent economic polices are expected to put the rupee on sustained upward trajectory in the near term.
- with inputs from Agencies