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Most expats living in the country are likely to benefit from every drop in their currency against the dollar, an expert says
Remittances from currency exchange centres and international money transfer services have increased significantly as UAE customers take advantage of the soaring value of the US dollar.
Al Fardan Exchange said that compared to the previous month, most currency transactions saw double-digit growth.
For example, EUR traded volumes increased by 34% month-on-month and GBP traded by 13%; the same is true for other currencies, explains Hasan Fardan Al Fardan, CEO of Al Fardan Exchange LLC.
“Most expats, especially Asians and Europeans living in the UAE, are taking advantage of the weakening of their national currencies, which has led to a marked spike in remittances,” said Al Fardan.
Also, with the currency expected to remain volatile in the coming months, most Emirati expats are likely to benefit from every drop in their national currency against the dollar, he suggested.
The U.S. dollar index, which measures the greenback against a basket of currencies, has risen 15 percent since the start of the year, the Economist Intelligence Unit said.
“The dollar has strengthened against all major currencies and since the dirham is pegged to the dollar, the same dirham is now more valuable against foreign non-dollar currencies,” Al Fardan said.
Likewise, a spokesperson for Lulu International said: “As U.S. interest rates continue to rise, we have witnessed an increase in outbound remittances, both in volume and transaction volume.”
This is mainly because any interest rate hike in the US would attract foreign capital into the UAE, the spokesman said. Additionally, the company witnessed double-digit growth in U.S. dollar remittances.
“We are seeing an increase in the volume and volume of remittances going to Asia (Pakistan, Philippines, India…). We are also seeing more expats and investors taking advantage of the low euro to send money to Europe,” they added. The spokesman added: “As tourists are taking advantage of the low value of the euro, there is a high demand for euro FCY (cash), making Europe an attractive destination.”
“European currencies continue to depreciate against the U.S. dollar due to the current global dollar strength. Until current trends persist, we expect remittances to continue to grow in volume and volume across the European corridor,” they forecast.
The exchange said on Friday that outbound remittances from retail and corporate customers had increased.
“However, with the potential for further interest rate hikes in the future, we haven’t seen a spike in these outgoing remittances, as some customers may suspend their remittances for a while,” a Lulu spokesperson said.
The exchange also said that remittances are increasing across all major countries. “However, people of American, British, Chinese, Hong Kong and Japanese nationalities were the major contributors to the volume,” they added.
According to statistics released by the World Bank in May 2022, remittances flowing into Europe and Central Asia increased by 7.8% in 2021 to an all-time high of $74 billion.
In addition, the number of overseas workers sending money home in emerging market economies has increased significantly this year, according to research by online money transfer provider ACE Money Transfer.
Data compiled by ACE Money Transfer shows a significant increase in diaspora remittances, or remittances, in several major emerging market economies. This includes countries such as Bangladesh (with an average increase of 12% in remittances over the past year), Pakistan (8%) and the Philippines (3%).
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