Rs14 to a dirham again; expats up remittances

Indian expatriate investors and remitters spurred by the weakening of the Indian rupee, have increased volumes of remittances for leading money exchange and transfer companies in the UAE.

At the time of filing this report (11am UAE), exchange houses were offering Rs13.98 to a UAE dirham, however, the international rate on xe.com was Rs14.01 to a dirham.

India’s macro-economic fundamentals  continued to weaken and the country’s leading Sensex stock exchange continued to slide.

The rupee- dollar exchange rate on Wednesday morning was 51.08 and experts predict that the Indian rupee will weaken to 53 to dollar in the near future.

Click here for latest rates on offer by UAE exchange houses

Speaking to Emirates 24|7, leading money exchange managers said the rupee has been moving in a weak zone from Dh 71.5 to Dh 73 per  Indian Rupees 1000 and they don’t see a major reversal of the trend, unless and until the Indian Central Bank officials feel uncomfortable about the slide in the currency value.

Says Saliamma Skaria, General Manager, City Exchange, the UAE-based money exchange company managed by the State Bank of Travancore: “The rupee movement will depend on the strength of fund flows from the Foreign Institutional Investors to the Indian stock market and the trend of global oil price.

“If the oil price continues to go up, the rupee may weaken further. The Reserve Bank of India officials will decide a comfortable level, but the money exchange companies are witnessing a sharp increase in the amount of remittance by expatriate customers.”

She said the remittances through City Exchange in the first three months of 2012 were up by 10 per cent in volumes compared to the corresponding three months of 2011.

Experts say India’s current account deficit, estimated at $19.6 billion, will widen further, if the international oil prices move up.

Foreign Currency Convertible Bonds redemption requirements and debt serving requirements for the External Commercial Borrowings will keep the Indian rupee under pressure.

The current financial problems haunting several European Governments will also adversely affect the rupee, as major chunk of India’s export earnings are from Europe.

[Image via Shutterstock]

Follow Emirates 24|7 on Google News.