The strengthening US dollar has seen currencies across the world lose value, and with all GCC states except Kuwait pegging their currencies against the dollar, that means expatriate workers sending money home also are benefitting.
But who is getting more bang for their remitted buck?
Australians in the Gulf have arguably fared the most from the strengthening dollar, with the Aussie tumbling 25 percent in the past two years.
In 2012, the Aussie was above par ($1.04) for the first time in recent history, after Australia managed to steer clear of a recession, while the US’ economic crisis saw it reduce interest rates to near zero.
But the Aussie’s gains began to recede in mid-2013 and at an even faster rate after November, 2014, falling to as low as 76 cents against the dollar earlier this month. It is now about 78 cents.
That means an Australian who remits AED5000 ($1,361) this week would be AUD$220 ($172) better off than if they sent it home in February, 2014.
If they had held on to AED5000 from February, 2013, it would now be worth AUD$439 more.
Most European expats in the Gulf have had similar gains but over a shorter period.
The Euro has lost 22 percent against the dollar since March, last year. The dollar now buys 0.88 euros, the most since before the global financial crisis.
Expat workers in the UAE who transferred AED5000 worth of savings to Euros today would receive €1192 euros ($1360), compared to €1005 in February, 2014, gaining the equivalent of $213.
BThe dollar – and therefore the dirham – also has soared against the notoriously strong British pound sterling. It gained 17 percent between July, 2014, and January, 2015, but has fallen slightly this month.rits in the UAE transferring AED5000 money home today would get £886 pounds, compared to £832 pounds a year ago, equal to an extra $83 in a year.
They would have received £794 pounds in July, 2014 – the equivalent of $141 less than today.
The Indian rupee has had a tumultuous time against the dollar in the past 18 months, having sank to a record low of Rs 68.85 in August, 2013, as it became clear the current account deficit under the former Congress government had blown out to almost 5 percent amid a fiscal deficit and a halving of economic growth, while the US was preparing to pull back on stimulus.
The rupee improved six months later on the back of expectations Narenda Modi, leader of the conservative BJP party, would win the May national election, which he went on to do.
However it has fallen again from its May, 2014, peak of 58.36 cents, to 62.7156 cents.
While there is little difference between the UAE-Indian exchange rate from a year ago, Indians with AED5000 today would receive INR5120 ($82.35) extra compared to remitting the same amount in May last year.
But they would get Rs 10,000 ($160) less than if they had sent the same amount home in August, 2013.
London-based Smart Currency Exchange CEO Charles Purdy said the strengthening dollar could have added a lot of value to Gulf expats’ savings if they have held onto it.
“The dollar has been the best performer over the last 12-18 months on a worldwide trade basis,” Purdy said.
“That will mean good news for all [expats in the Gulf], they will have got more for their local currency. You’re better off sending your money home [now] than you were six months ago.”
He said it was a pertinent time for expatriates to closely monitor exchange rates and potential future impacts when deciding whether to hold their savings or remit it.
Factors such as the oil price rising again, a surprise UK election result, worsening conditions in Greece or a slowdown in positive sentiment around Modi’s economic policies could all impact the dollar/dirham in the near future.
“Experience tells me you can never know what’s around the corner,” he said.
So should Gulf expats hold onto their local currency or take advantage of today’s better rates and send it home?
“It’s one of those games – people think they can guess which way the market is going,” Purdy said. “I always say, if you think the rate looks acceptable at the moment, send at least some of it, if not all of it. If you believe it will get stronger, don’t do all of it at once, do a sensible proportion of it.”For all the latest currencies and forex rate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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