The steep fall in the value of Asian currencies against the US dollar has come as a relief to expatriates who have suffered long periods of unfavourable exchange rates in the Gulf region.
Expats from India, Pakistan, Bangladesh and the Philippines living in Oman are getting more value for their dollar-pegged Omani rial when they remit funds back home.
Recently, the US dollar gained sharply against the Indian rupee and other Asian currencies as demand for US Treasuries, which is seen as a relative safe haven, rose and funds flowed into the dollar as concerns grew over the eurozone debt crisis.
Baldev Prakash, general manager, Mustafa Sultan Exchange, said that due to the dollar's strength against the euro, expatriates are likely to continue benefiting from favourable rates in the near-term.
"The Indian rupee is almost at a 15-month low against the Omani rial. However on Friday it recovered slightly. But do not expect the US dollar to weaken any time soon as the European debt crisis is likely to continue."
"We witnessed high remittance volumes when the Indian rupee touched R124 against the Omani rial on Thursday. However, the rupee rose on Friday and is now hovering around R123 to the rial." The Pakistani rupee touched 228.5 against the rial on Thursday, its lowest level in more than two years.
Sashi Dharan, general manager, Global Money Exchange, said that the rupee's performance is driven by the dollar's strength against major currencies. "The Indian rupee saw a mixed impact of a weak euro and a fall in the Indian stock market. We expect the Indian rupee to remain range-bound at R46.5-47.5 against the dollar in the near term.
"However, we have not seen a big rise in remittances. People had sent most of their money during Ramadan and are not able to capitalise on the recent rise of the rial."
Reju Mathew, marketing manager, Oman UAE Exchange Company, said, "The rates have been steadily falling over the last one week. In this situation, people tend to hold on to their money, eyeing further gains. But with the declines coinciding with the festivals of Eid and Onam the volume of remittances went up."
On Friday, the Indian central bank raised its policy rates by 25 basis points to check rising inflation in the country. Money experts believe that if the Indian central bank intervenes in the forex market to support the currency, the value of Indian currency may rise against the US dollar.
© Muscat Daily 2011
