Indian Expats in Middle East on a High as Rupee Falls Ahead of Festive Season

Call it divine intervention or mere economic coincidence; the recent devaluation of the rupee vis-à-vis US dollar has brought a windfall gain for the Indian diaspora working in Middle East countries ahead of the festive season back home. The fall in rupee's value versus some Middle East currencies has given a sudden boost to the remittance flow from the UAE, Saudi Arabia and Qatar.

At a time when blazing inflation at home and away was eroding the remittance value, the weakening of the rupee came as a major relief for the Indian diaspora. Starting early September, the currency witnessed a downward march and dipped to a record low of Rs 12.20 per Saudi Riyal on September 18. It continued to slide further and reached Rs 12.66 per Riyal on October 2. This is a huge fall compared to the average rate of Rs 8.65 per Riyal in February this year. Similar was the trend against UAE dirham and Qatari Riyal. The decline in rupee's value resulted from an appreciation in US dollar following a drop in international crude prices.

The currency devaluation came as a festival bonanza for the Indian diaspora, a majority of whom had been holding back remittances for the last two months. With the Ramadan month coming to an end and the festive season (Eid, Dussehra and Diwali) knocking on the door, this expat workforce, particularly the low skilled migrants, rushed to the exchange houses to cash in on the favourable exchange rates. There were others, still more optimistic, waiting for the rate to breach the level of Rs 13 per Riyal.

According to World Bank data, about 5.7 million Indian expats sent $27 billion remittances last year, making the country the largest remittance recipient in the world. A large portion of this, around 35%, were remitted from the Middle East alone.

The sudden rush for sending remittances has boosted the business of the exchange houses in the region, which have the Indians as their major customer segment. According to an official of the UAE Exchange, remittances have gone up by about 10-12% during Ramadan and the Onam festival this year, compared to a 5-6% jump in normal years.