While this historic fall in the rupee has prompted some Indian expats to remit money back home, others are holding on to their rials owing to two main factors – the expectation that the rupee will fall further to touch 200 to the rial mark and delayed salaries which has become commonplace across various sectors in the sultanate.
Depending on the profile of their regular clientele, exchange houses are reporting brisk business at one end of the spectrum to only a marginal increase in remittances at the other end owing to wary customers unwilling to take advantage of the situation.
Explaining the factors playing in this fall in value of the rupee, Boban MP, CEO of Oman UAE Exchange, said, “This decline can be attributed to the
US-China trade war, rate hikes by the US Fed, economic turmoil in Turkey and Argentina, the US sanctions planned against Iran, rising oil prices, and India’s widening trade deficit.”
According to Boban, with the Indian currency depreciating, remittances to India have increased. “Indian expats can be seen queuing up at financial houses to avail best exchange rates and transferring large sums of money back home.”
He also informed that with crude oil prices and global political conditions dictating the status of the rupee in the next few months, he foresees the Indian rupee to slide further in the coming weeks.
An official at Purshottam Kanji said the exchange has been seeing white-collar workers taking advantage of the remittance rate.
“But they are holding on to some part of the money, expecting a further fall of the Indian rupee. It’s likely to touch R200 against RO1 though not overnight,” he added.
At Global Money Exchange, business hasn’t seen a drastic change.
“We have witnessed only a marginal increase in the number of customers as the majority of those who come to us for remittance are blue-collar workers. They send money back home every month irrespective of the rupee rate. But yes, they are happy when they get a higher value for the same amount they send owing to change in exchange rate,” R Madhusoodanan, general manager of Global Money Exchange, told Muscat Daily.
Echoing the observation, Philip Koshy, country manager of Modern Exchange, said remittances have not been significant because its clients have to send money back home irrespective of the exchange rate.
“Of course, they are happy now with the current rates. However, for investors, they are waiting for the best deals and in my view, the demand for dollar is now high in India.”
The fall is seen amid a surging demand for the dollar, the international benchmark for oil trade. Oil sold as high as US$76.1 per barrel last week.
“A major factor which is contributing to the Indian currency’s fall is that the Indian market is aligned with the global market in terms of crude oil prices. As crude oil prices go up, the dollar strengthens leading to a fall of the rupee because India needs to buy crude oil in dollars,” said P K Subudhi, GM, Mustafa Sultan Exchange.
Among those unable to take advantage of the current exchange rate is a company executive whose salary has been delayed. “I hope the rate remains high till I get my salary.”
Another executive Syed Aleem, who is based in Muscat, said, “I send money for my family mostly at the end or beginning of the month when I receive my salary. Sometimes the Indian rupee falls and we get a good rate. But obviously I don’t earn that kind of money that I can save here and wait for a good time to send it back.”