UAE-based British expats took advantage of the drop in sterling in the days following the UK election, as the number of dirham trades flowing back to the UK rose by over 40 percent in two days, a London-based currency exchange said.
“Since the election we have definitely seen a significant increase in expats sending their funds back home to the UK. The amount of trades which bought GBP against the AED increased over 40 percent in the two days following the election result,” according to Chris Canning, account manager at currency exchange company First Rate FX in London.
Following the hung parliament result in the May 6 UK general election, the sterling pound fell just over 3.5 percent overnight and at its lowest it was trading at AED5.35 against the UAE dirham.
“These were the lowest trading levels in over a year,” said Canning.
Sterling dropped against most of the major global currencies, especially the US dollar, which the UAE dirham is pegged to.
“This fall in rates made it very attractive to lock-in the exchange rate for the coming year. We saw a significant increase in clients booking regular payments at a fixed exchange rate for transferring their dirham earnings back to the UK,” added Canning.
Canning said it was difficult to make predictions of how the market would react in the short term.
“Long term projections from the major banks see the Pound eventually picking up to AED5.75 levels but this may not be for six to twelve months. This is still way below the exchange rates of AED6 and above which were experienced at the end of 2009,” said Canning.