Are Indian, Pakistani rupees and Philippine peso among weakest currencies now?

As first half of 2019 draws to a near, the outlook for remittances from the UAE looks marginally good with analysts predicting a rise in outflow of monies at four per cent.

The US-China trade deal, on-going Brexit issue, fluctuating oil prices and UAE Central Bank’s fee hike of 25 basis points (bps) among other factors are likely to have an impact on currencies.

Pradeep Kumar T.P., chief executive officer, UAE Exchange & Unimoni said that as per world bank projections, remittances to low and middle-income countries (LMICs) will moderately increase by four per cent in 2019 against 9.6 per cent recorded the previous year.

“South Asian countries are especially going to benefit in 2019. This is in spite of external factors like oil prices, migration policies and geopolitical risks will impact the growth trajectory. With the dirham maintaining its strength against most Asian currencies and with festive seasons coming up in the second half of the year, it is good news for remittances all the way. We will in all likelihood see a spike in remittance outflows to Bangladesh, India, Pakistan, Philippines and Sri Lanka,” said Kumar.

“Added to this, as the government pushes measures to diversify the economy, we are expected to see more economic activity and employment across sectors.”

According to Central Bank UAE figures, expatriates living in the UAE sent home a total of Dh39.9 billion during the last three months of 2018 alone. This translates to roughly Dh13.3 billion a month. The bulk of the funds landed in India, Pakistan, Philippines, United States (US) and Egypt.

The latest quarterly report released by the UAE Central Bank showed that among the five top-receiving countries, the South Asian country remained the biggest beneficiary of salaries earned in the United Arab Emirates, accounting for more than a third (34.2 per cent) of outbound money transfers.

India received a total of Dh13.6 billion worth of cash sent through exchange houses and banks during the fourth quarter of 2018, while Pakistan received the second-highest share of Dh3.8 billion, or 9.4 per cent of the total remittances.

The third biggest share went to Philippines with remittances pegged at Dh2.9 billion or 7.2 per cent of the money flows.

So we look at five South Asian currencies and see where they heading the next three months. Analysts predict the currencies to either remain stable or fall just slightly. Take a look.

Indian Rupee (INR)

According to Adeeb Ahamed, managing director, Lulu Financial Group, the Indian rupee could likely to fall slightly the next three months in the range of Rs.68.50 – 71.40 against the US dollar (Rs18.65 – 19.40 for a UAE dirham). As of today, the rate stands at Rs18.90 against the UAE dirham.

“The major factors affecting the movement of Indian Rupee are the foreign portfolio investors (FPI) inflow, stock market movements, movement of other major currencies such as Euro as well as the fluctuating oil prices,” said Ahamed.

Added to this, with the Indian general elections concluding, people are reposing their mandate on the existing government and the outlook on stock markets are looking positive. With a decisive mandate in place, there is likely of a movement in the India Rupee, of course, all depending on presentation of budget allocations.

Other factors to impact the Indian rupee will be fluctuating oil prices, the ensuing global trade wars and UAE’s central bank interest fee hike by 25 basis points (bps).

Pakistani Rupee (PKR)

Outlook for the Pakistani rupee is likely to remain stable and hover in the range of (PKR40.28 – 42.20 against the UAE dirham). As of today the PKR stands at 41.33 against the UAE dirham. According to Ahamed, outlook for the Pakistan rupee does not look favourable despite a new government in place. The International Monetary Fund (IMF) bailout and debt issues will weigh heavily its currency.

“The fall in the economic growth to 3.9 per cent in the first quarter of this year is not helping the situation. Take this, the Pakistan Rupee has already tested the 150 mark against the US Dollar. We believe that the Pakistan Rupee will hover in the range of 148 – 155 against USD for the next three months.”

Bangladeshi Taka (BDT)

The Bangladeshi Taka (BDT) on the other hand is likely to slide further than it is now. “We expect the currency to fall to BDT84.00 – 85.50 against the USD the next three months. At present, the currency is hovering around 84.30 – 84.80 level against the US Dollar. The movement in other Asian currencies would have some impact on the Bangladesh Taka.

“The Bangladesh Taka has been more stable comparatively on account of investments from its neighboring countries. Indian automobile companies, and few engineering firms have shown interest in expanding business to Bangladesh,” said Ahamed.