Indians rush to send money home as rupee plunges
Posted on September 29, 2011
KUWAIT — Money exchange centers across Kuwait are witnessing a heavy rush of Indian expats in the last few weeks who sought to cash in on the continued plunge of the Indian rupee against the US dollar. Though, the rupee improved marginally at the local forex market yesterday against the dinar, it continued to remain weaker prompting rich non-resident Indians (NRIs) to transfer huge funds to India.
There is a significant rise in high value remittances to India in the last few days,” said Pancily Varkey, country head, UAE Exchange Centre. Talking to the Kuwait Times, Varkey said, while the counts (the number of remittances) remained more or less the same, the volume has increased sharply suggesting that expats with high income are taking advantage of the weakening of the rupee.
A Kuwaiti dinar fetched 177.36 rupees yesterday while it had traded for 180 rupees last week, which was a two-year low for the Indian currency. But many market specialists feel that a plunge in the value of the Indian rupee usually doesn’t help the expats in the low-income categories much who are unable to take advantage of the situation.
Laborers in construction and industrial sectors, housemaids and poorer workers, who have to support families back home, transfer funds every month. They are not in a position to increase the amount they regularly send. They are not very much conscious about the fluctuations in the value of the rupee also,” said Jalil Ahmad, a currency trader at a local exchange.
Indians with low salaries and income won’t benefit much from the depreciation of the rupee. But big businessmen and high-income groups are transferring funds to India now,” said a currency specialist on condition of anonymity. The strengthening of the US dollar in the near-term following a deepening debt crisis in the euro-zone has hit the rupee hard. According to experts, the Indian currency may continue to remain under pressure in the short-term.
According to currency specialists, there is a growing confidence crisis in Indian forex market prompting foreign funds to flee the market. “Many industries including the IT sector are taking cover and adopting a watch- and-wait’ policy in view of the turbulence in the global market,” Varkey said.
Market observers also report a major flight of foreign institutional investors from the Indian stock market. According to unconfirmed reports, FIIs have pulled out funds worth Rs1,400 crore from Indian stock markets in the aftermath of a global financial crisis. But many dealers predict that the pressure on the rupee will ease sooner than later and the currency will appreciate against the dollar by the end of October.
Sajeev K Peter
27 Sept 2011