KOCHI: Francis Joseph (name changed) and his wife work in Abu Dhabi and are coming to Kerala later this month for holidays. High on their to-do list is buying property in Kerala using their savings from the past three years.
The fall in the value of rupee against the US dollar the Indian currency has fallen 6 per cent in the first six months of 2022 means they will get more value for their dirhams.
"When we reached Abu Dhabi in 2019, the rupee was trading at 17.6 to a dirham. Now, it's at 21.5 rupees per dirham," says Francis.
That's a fall of 22.15 per cent in the last three years.
The decline is good news for lakhs of Indians working abroad. Kerala is the biggest beneficiary with an estimated 27-28 lakh Keralites working abroad. Foreign remittances contribute a fifth of the state’s economy.
Most West Asian currencies are pegged to the US dollar. This means when it appreciates against the rupee, there is similar appreciation in Gulf currencies as well.
Prakash Bhaskar, head of forex business, Unimoni India, says, "We can expect an increase in NRI remittances from GCC countries, the UK, the US, etc. Due to the inflow of money to India, enquiries and transactions in real estate may improve in the coming days."
According to the World Bank, India received remittances worth over USD 89 billion in 2021, a growth of 8 per cent from USD 82.73 billion in 2020. Though the world was hit by the pandemic in 2020, remittances that year were a shade over the USD 82.69 billion received in the non-COVID year of 2019.
"Expats get a higher value on remittances to India. Currently, it is favourable to NRIs. It is good to convert US dollars, AED (dirham), and Saudi riyal in the next six months. Beyond that, there are chances for the rupee to appreciate," says Bhaskar.
Rupee depreciation not all good news
However, KV Joseph, a director of the Thiruvananthapuram-based International Institute of Migration and Development, says the depreciation of the rupee is not good news for the overall Indian economy.
"While it is good for the expatriates sending money back home, for the Indian economy the cost of imports going up is not good news. And we are a big net importer," he says.
Further, the decline in the rupee will also make the cost of overseas travel and students going abroad for higher studies shoot up, Joseph says. Unimoni's Bhaskar says India mainly spends on oil imports and gold.
"But recently, the government hiked customs duties of gold from 7.5% to 12.5%; also, the government imposed a windfall tax on crude oil exports. All these measures will again support the rupee and regain its value in the medium term," he says.