Indians are queuing up at exchange houses in Dubai and other emirates for remitting funds back home with the rupee falling against the UAE dirham. With the dirham now fetching over Rs 13 as against Rs 11 in July 2011, remittances from the UAE between July and September 2011 have jumped 30% compared to the preceding quarter.
India was the world’s largest remittance recipient in 2010 with $55 billion transferred to India by expatriates. The Gulf nations-which include Saudi Arabia, Oman, UAE, Bahrain, and Qatar-contribute 30% of India’s total remittances.
Remittances from the Persian Gulf region are likely to rise in the festive season amid chances of the rupee further weakening against the dollar. The volume of currency transactions to India in the UAE Exchange rises traditionally during festivals such as Onam, Diwali, Christmas and the New Year.
Ashok K Gupta, CEO, GCC Operations for Bank of Baroda, said, “Expat Indians in the UAE usually accumulate dirhams with an eye on the exchange rates and remit funds as soon as the rupee falls.” The unrest in the Arab world and catastrophic events in Japan triggered fears of a lower inflow of remittances by Indians.
Earlier this year, Standard Chartered bank waived all charges on remittances made by customers to India through its online banking service under a limited period promotional offer in the UAE. Standard Chartered had tied up with Times of Money in order to service customers in the UAE and other countries. TimesofMoney is a leading payments service provider, which serves various financial institutions offering them money transfer service. “Fundamentally, the industry is poised for a good growth. Gulf is no doubt a big market. But remittances are growing from the US and Europe as well. We expect to have growth of at least 10% in remittances this year to cross the $60-billion mark,” said Avijit Nanda, president, TimesofMoney.
Y Sudhir Kumar Shetty, COO, Global Operations, UAE Exchange, told TOI, “Remittances from the gulf region have been steadily increasing since last month after the rupee started weakening against the dollar coupled with Eid and Onam festivals. Remittances have grown by almost 30% compared to the previous quarter. During the last couple of weeks, we have seen an increased activity in the large-ticket segment. These are from people who send money for investments rather than domestic commitments.”
Analysts believe that the rupee will be under pressure in the near future considering the increased fiscal deficit and the rising oil import bill. If euro continues to weaken, the rupee could further depreciate, said a Dubai-based analyst. “I got 50,000 dirhams as advance to pay for my house security deposit from my office. I transferred the entire amount -Rs 6.5 lakh after the currency conversion-to India. Now I have opted for a PG accommodation by paying dirhams 2,000 per month,” said S Pathak, an official who joined a Dubai-based firm last month.
Besides the rupee, all Asian currencies have weakened against the dollar, including Malaysian ringitt, Indonesian rupiah, Philippines peso, Korean won. Also remittances to countries like Philippines, Pakistan, Sri Lanka, Indonesia are on the rise, though not as much as that to India.
Piyush Pandey, TNN | Sep 22, 2011, 03.49AM IST