Dubai: Remittances from the UAE are seeing a surge as several, particularly South Asian currencies, were losing ground and recorded remittance-beneficial rates in the past days. But will the currency trend continue?
Estimates show Indian Rupee and Philippine Peso staying in check, while Pakistani Rupee will rise even further in the weeks to come.
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 weeks and month, 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.
Indian Rupee value to stay steady
With the Indian rupee (INR) currently at 20.12 to the UAE dirham, the Indian rupee last weakened to 74.2 against the US dollar.
According to research, the Indian rupee is expected to drop to 20.06 by the end of next month against the UAE dirham, but the value of the Indian currency is going to stay steady in the coming days.
So it is financially prudent to remit any time next month, as you will get more or less the same amount of Indian Rupees for your UAE dirham’s worth, versus August-end. These month-end low rates are seen persisting in September and October, steadying at 20.1, current estimates revealed.
Analysis show rates will stay between 20.1 to 20.6 during the rest of 2021, indicating November will be the most cost-effective time to remit, when compared to the remainder of the year. As of now, the end of this year and the start of next year, rates are expected to stay remittance-beneficial.
Pakistani Rupee seen soaring in the coming weeks
In Pakistan, the buying rate of the US dollar was currently 164.24 Pakistani rupee (44.71 versus UAE dirham).
According to research, the Pakistani rupee is expected to dip to 45 mid-September, from the current 44.7 against the UAE dirham, before spiking to 45.6 during the last weeks of September. Rates will further rise to 46.04 just days later, in the first week of October.
During the last weeks of September, the Pakistani Rupee will mostly average between 45.1 and 45.6, making it an ideal and the most profitable and cost-effective time to remit.
Where is the Philippine Peso headed in the weeks to come?
According to research, the Philippine Peso is expected to steady 13.7 against the UAE dirham over the next 30 days – making it ideal to send money over the next coming weeks.
The rates are expected to stay steady in the months of August and September as well, ranging between 13.6 and 13.8 respectively, before the Philippine Peso rises slightly in October to 13.8.
The average exchange rate against the UAE dirham in August will be 13.56, with the currency slipping 0.4 per cent in the month. Over the month of September, rates are expected to stay in check, edging down just 0.7 per cent, with the exchange rate averaging at 13.47. In October, rates are currently expected to spike to 13.79, a rise of 2.4 per cent.
However, as rates are expected to rise further during the following months of November and December this year, it would be cost-effective to remit during the coming months. The Philippine Peso, which is currently 13.64 against the UAE dirham, dropped 1 per cent during the last quarter.
What are the factors triggering these currency movements?
The value of a country's currency is linked with its economic conditions and policies.
The value of a currency generally depends on factors that affect the economy such as imports and exports, inflation, employment, interest rates, growth rate, trade deficit, performance of equity markets, foreign exchange reserves, macroeconomic policies, foreign investment inflows, banking capital, commodity prices and geopolitical conditions.
Looking ahead the currencies are likely to remain under pressure on rising crude prices and relative strength of the US dollar in the forex markets. A possible decline against the dirham is a reflection of the decline of the currencies' fall against the US dollar on which the UAE currency is pegged.
Current weakness is largely linked to the price of international benchmark Brent crude, which has risen 35 per cent this year towards $70 a barrel, driven by economic recovery from the pandemic and supply restraint by the Organization of the Petroleum Exporting Countries and its partners in the alliance known as OPEC+.
OPEC and its allies, including Russia, believe oil markets do not need more oil than they plan to release in the coming months, despite US pressure to add supplies to check an oil price rise, four sources told Reuters.
The world's third-biggest oil consumer, India, is concerned about domestic price pressures, with the nation expecting fuel consumption to return to pre-pandemic levels by the end of this year.
Looking at the potential surge in dollar demand in months ahead, South Asian currencies could experience further downward pressure in the months ahead.