A rise in remittances over the last few weeks as a result of the drop in sterling
British expat savers and investors in the United Arab Emirates are seeking to take advantage of the uncertainty over the Brexit process and the slump in the value of the sterling currency, according to experts in Dubai.
When new Prime Minister Boris Johnson took over last month, there was confusion over whether the new Conservative leader will push for a no deal Brexit and crash out of the European Union on October 31 later this year.
The British currency shed around 2.4 percent of its value in the week after Johnson took over from Theresa May and was headed for its worst monthly performance since the United Kingdom voted to leave the EU two years ago.
The drop in the value of sterling has spurred savers to send more of their UAE salaries back home to take advantage of the currency difference.
"Remittances to the UK has been on the rise for some time now as British remitters have been encashing on the sliding home currency and sending more money back home," Pradeep Kumar T.P., CEO at money transfer companies UAE Exchange & Unimoni, said in a statement to Arabian Business.
"While Sterling’s downward drift is concerning for UK residents, it is an opportune moment for both British expats (as they can remit more) and globetrotters (who can gain more from the exchange rate by investing in multi-currency prepaid cards). We, for example, have noticed both the customer footfalls, especially British expatriates, at our retail outlets and the remittance outflow to the UK increase by double digit last week when compared to the previous week," he added.
Capitalise on investments
Since Johnson’s entry into 10 Downing Street and the impact on the British pound, expats have also looked at how they can capitalise on this in terms of investments in the UK.
Financial advice firm GWM said it has received ‘hundreds’ of enquiries from UAE-based expats about how best to invest in the wake of the Brexit negotiations.
“We had several clients coming to us on Thursday and Friday querying whether to invest now as they believe Johnson will stabilise the economy and the pound will strengthen or to hold out because they believe the lowest point has yet to be reached and Brexit will cause the pound to slump further,” GWM chief investment officer, Iain Ramsay, said in a press statement.
“There is no doubt that investing in the British Pound if you are earning in UAE Dirhams is a great option but we would not suggest committing everything now. It is about spreading that investment and staying on top of the latest happenings as we head towards Brexit,” he added.
On Monday morning, Reuters reported that sterling was hovering near 2017 lows at $1.2119, as uncertainty over the Brexit plan going forward continues to weight on sentiment.