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UAE exchanges recorded Remittances to Europe surge After the euro has continued to depreciate against the dollar, European residents have been offered an opportunity to repatriate funds at a favorable exchange rate.
Al Fardan Exchange recorded a more than 30% month-on-month increase in remittances from European residents in the UAE in September and double-digit growth year-on-year.
“This Fed hikes rateswhich caused the euro to fall further, which is sure to attract more remittances in the coming days, expected Growth prospects for remittance volumes Hasan Al Fardan, CEO of Al Fardan Exchange said.
“We expect the euro to approach 0.9700 by the end of the year. This will be a combination of socioeconomic, political and global factors Fed’s actions to curb inflation. “
The euro and sterling both plummeted to fresh lows after the Federal Reserve raised interest rates by 75 basis points on Wednesday. Send a bigger growth signal the rest of the year.
The euro was at 0.9874 against the dollar at 12.18pm UAE time on Thursday, down about 14% since the start of the year. GBP/USD is trading at 1.1306, down around 17% since the start of 2022.
The U.S. dollar index hit a 20-year high of 111.63 after the Fed hiked rates.
European currencies bear the brunt of the FX market as Russian President Vladimir Putin orders mobilization of more troops The region has been hit hard as the conflict in Ukraine fuels concerns about the region’s economic outlook Moscow compresses gas supplies to EuropeReuters reported.
A Lulu Exchange representative said customers in the UAE were taking advantage of the decline in major currencies.
“We expect to see an increase in remittances in major currencies, especially among merchants and investors who will certainly take advantage of this opportunity,” a company spokesperson added.
Meanwhile, the Bank of England may choose to raise rates by 50 basis points rather than 75 basis points at its meeting on Thursday, said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“The increase in spending by the Leeds Terras government is bad for inflation, but because of £40bn [$45.2bn] The energy plan is designed to keep inflation in check – and certainly, the Bank of England could ease on interest rates,” she said.
“The Bank of England is also expected to announce quantitative tightening, but the impact of QT will remain in the shadow of the huge amount of money the Truss government is ready to spend. On top of energy spending, there could be £30bn in tax cuts and stamp duty cuts. “
This may lead to GBP/USD hits parityshe says.
Mr Al Fardan said Al Fardan Exchange expects the Bank of England’s benchmark interest rate to rise above 3% by the end of the year.
He said a number of factors drove the pound to a fresh 37-year low against the dollar.
“All of these factors will exacerbate further depreciation of the pound. We expect sterling remittances to increase in the coming days.”
With the pound and euro at historic lows, Lulu Exchange also expects a 20% to 25% increase in remittances to Europe, the representative said.
Meanwhile, travel currency specialist No 1 Currency said the pound’s turmoil in currency markets over the past 12 months had made holidays more expensive for Britons in 48 of the world’s 56 most visited destinations.
The cost of travel to tourist hotspots such as Disneyland has risen since the pound fell against the dollar. Converting £1,000 into US dollars this year would be $243 less than last year, the company said.
Sterling fell 3% against the euro after data showed that short trips to European countries France, Spain and Portugal were becoming more expensive.
“British holidaymakers have had to budget cautiously this year, hit by the cost of living crisis at home and the devaluation of the pound abroad,” said Simon Phillips, managing director of No 1 Currency.
“Thankfully, there are still some countries this year that have gone further with their money than they did last year.”
Over the past year, the pound has risen in eight global destinations, including Turkey (76%), Sri Lanka (52%), Argentina (22%), Hungary (10%), Japan (9%), Sweden (4%), Egypt (3%) and South Africa (0.2%), data from No 1 Currency show.
Updated: September 22, 2022 at 10:20 am
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