By Sarah Townsend
Philippine peso hits highest level in six years; currency houses predict strong US dollar will push up dirham value even higher
Indian and Filipino expats in the UAE stand to reap the biggest remittance returns this year, as their home currencies hit new lows against the dirham.
The Philippine peso surpassed the 13 to AED1 level for the first time in six years last week, and the Indian rupee has been on a downward trend against the dirham.
As of Wednesday January 28, the rupee stood at 18.56 per AED1 and the peso stood at 13.04, according to UAE Exchange data.
Also in UAE Exchange’s list of the five lowest and most remitted currencies from the UAE as of Wednesday was the Sri Lankan rupee at 28.17 per AED1, and the Pakistani rupee, which stood at 28.55 per AED1. The Thai baht stood at 9.76 per AED1.
The strong US dollar has pushed up the value of the dirham against several currencies and meant many UAE expats can reap bigger remittance volumes when sending money home.
Promoth Manghat, CEO of UAE Exchange, told Arabian Business: “Weakening of the currency in the home country is always happy news for the expatriates as they get to send more money home.
“According to a World Bank report, 88 percent of the UAE population is expatriate, dominated by South Asians. The strengthening of the US dollar has been working to their advantage for some time now.
“Since the dirham is pegged to the dollar, it remains stable in spite of the fluctuation. But since the South Asian currencies are not pegged to the dollar, they tend to weaken against the strengthening USD, which earns expatriates more home currencies during transfers.
“While the South Asian remittance corridors have been benefitting from the phenomenon, the strengthening of the dollar has been affecting Central Asian remittances adversely.
“As global currencies like the Chinese Yuan and the Russian Ruble weakened against the USD the huge number of expatriates in Russia and China have slowed down their frequency of money transfers. Most of the economies in the central region are highly dependent on remittances for their sustainance.”
According to Gulf News, currency exchange houses have predicted that new lows could be achieved by some currencies this year given that the US dollar is expected to appreciate further.
Sudhesh Giriyan, COO of Xpress Money, said: “There is a possibility that the [Philippine] peso could cross the 14 mark within this year.
“In terms of percentage, the peso has devalued much more than the Indian rupee and has currently hit its lowest in the past six to seven years.”
Giriyan added that the rupee is gaining more strength and is poised to cross an all-time low of 18.85 against the dirham, the level last reached in August 2013.
“Once it crosses that mark of 18.85, there is a likelihood of it reaching the level of 20, but one has to wait and watch if the Reserve Bank of India steps in and intervenes.
“The rupee rate around Christmas was about 17.95 to a dirham. In a month, the rupee has crossed 18.50, which is a major jump of almost 0.60 and depreciation of 2.7 per cent.”