Indians in Qatar take advantage of the depreciating rupee
Indian expatriates in Qatar have been taking advantage of the depreciation of the Indian rupee by increased remittances to India. While most people have been dipping into their savings to fund their remittances, a large number of them have been availing of loans from banks in Qatar for this repatriation.
Service Leader Dexter Bowen at Qatar UAE Exchange reported that the currency exchange center has been experiencing a surge in business in the Indian corridor. “Just after Ramadan, as the value of the Indian rupee dropped, there was a large increase in the volume of remittance transactions to India. There was especially a 20%-30% increase in the number of people who availed of bank loans for repatriation of money,” he said.
Assistant Professor of Economics at Qatar University, Dr. Aruna Dhade said that the reason most people avail of loans for repatriation is because the difference in the rates of interest on loans in both countries. “The rate of interest on loans in India exceeds 8% whereas the interest on loans in banks in Qatar is between 3.5% and 3.99%. This is a major difference for most people.”
The value of the Indian rupee against the Qatari riyal currently stands at 17.55 Indian Rupees (INR) to 1 Qatari Riyal (QR). This is a major jump from the QR12 or QR13 that it previously stood at last year.
Political instability and the upcoming national elections in India have been responsible for this depreciation in the currency. Its value has been falling since the beginning of 2013 and it reached a record low of INR68.83 to US$1 in late August this year. This trend has continued to persist until now and is expected to continue for a long time.
Other currency exchange centers around Qatar have been experiencing similar increases in the volume of transactions to India from Indian expatriates in the country. Operations Manager of Al Zaman Exchange in Doha, Zubair Abdulrahman, said that the volume of transactions at the exchange center increased dramatically by 20%-22% at Al Zaman around two or three months ago when the value of the currency value had increased to INR15 per riyal. This was their first phase. “In the second phase, when the value of the rupee reached INR17, there was a 13%-15% increase in the number of people who sent money home, they were mostly high-profile customers. However, in the past week there hasn’t been much activity as most people are probably anticipating a further fall in the value to reap higher benefits from this fall. They probably didn’t realize that the currency would depreciate further, but they have had some time to acquire more information during this time,” he said.
Abdulrahman also added that regional political disturbances would affect the value of the rupee too. The higher the likelihood of war with Syria, the further the prices of crude oil and gold are likely to increase, which would affect the value of the rupee negatively too due to a widened trade gap.