The UAE has seen a notable increase in remittances to Asia following the victory of Donald Trump in the recent US election, as the dollar surged against several Asian currencies. This has led expatriates from India, the Philippines, Nepal, and Bangladesh to seize the opportunity to transfer funds home while exchange rates favor them.
Surge in Remittances
According to Botim, a super app in the UAE, there was a 3% increase in transactions to India and a 4% rise in transactions to the Philippines during the first 12 days of November compared to the same period in October. The Nepalese rupee, closely linked to the Indian rupee, saw its exchange rate against the US dollar hit an all-time high, with remittances from UAE to Nepal increasing by 36% from September to October. Similarly, remittances to Bangladesh rose by 32% over the same period.
Adeeb Ahamed, Managing Director of LuLu Financial Holdings, noted that “the strengthened dollar and favorable exchange rates have incentivized expats to take advantage of the situation, underscoring the importance of remittances during economic shifts.”
To Remit or Hold?
While many are capitalizing on the strong dollar, experts caution against rushing to remit funds. Vijay Valecha, Chief Investment Officer at Century Financial, advises that while the dollar is currently on a bullish trajectory, those who can wait may benefit from even better rates as the Federal Reserve’s high-interest policy keeps the dollar strong. Naveed Ali, Director of Finance at Zand Digital Bank, echoed this advice, noting that the short-term strength of the dollar could continue into early 2025, keeping pressure on currencies like the Indian rupee and Philippine peso.
Market Outlook
The US dollar's strength is expected to continue putting pressure on several global currencies, influenced by factors such as the Federal Reserve’s policies, regional economic trends, and potential US tariff changes. Trump’s proposed tariffs, which could impact imports from the European Union and China, add another layer of uncertainty to the currency markets.
For the UAE, the pegging of the dirham to the dollar offers some stability, which could benefit the UAE economy under Trump’s leadership if the dollar continues to strengthen.
