As rupee falls, remittances take wing

Well, not everyone’s afraid of a falling rupee. Certainly not non-resident Indians (NRIs).

At a time when importers are rushing for cover and authorities are looking for ways to stop  the local currency from falling further, NRIs are rushing to convert their foreign currency savings into rupees.

Remittances to India have swelled over the past month or so, during which the rupee has lost around 5% value against the dollar, according to money transfer operators.

“Sentiment is positive among expatriates. There has been at least 10-12% increase in remittance flows to India,” said Sudhesh Giriyan, business head of Xpress Money, which operates in 150 countries.

Typically, remittance inflows are strong in the first and last weeks of a month.

However, given the sharp slide in the rupee of late, remittances have been healthy even in the middle of the month.

There are two kinds of inflows – one towards regular monthly maintenance back home and the other when surplus funds are sent in to benefit from opportunities like a weaker rupee.

“NRIs are value watchers. They always keep a tab on rupee exchange rate,” said Avijit Nanda, president, TimesofMoney. According to him, whenever the rupee depreciates, there is a 30-40% surge in remittances on a daily basis.

Kiran Shetty, managing director, India at Western Union Money Transfer, concurred. “When we see a spike in between, they are sending out savings to make the most of rupee fall.”

Industry players said the upsurge in remittances was visible across corridors.

“The rise is primarily from the US and Canada. More and more people send money into India. In fact, even those who don’t send regularly to benefit from the weakening rupee,” said Harsh Lambah, senior regional director – South Asia, MoneyGram International.

This week, the rupee has already registered an all-time intraday low of 58.98 to the dollar.
The key factors responsible for rupee fall were foreign fund outflows from Indian debt and a globally stronger dollar.

On Friday, though, the local currency recouped some of its losses by appreciating 0.8% to 57.53 per dollar vis-a-vis the previous close.

Experts see the rupee remaining under pressure for a while.

Tirthankar Patnaik and Prerna Singhvi, analysts with Religare Research, said in a note recently that a level of 60 per dollar cannot be ruled out in the near term.

“If this weak rupee condition continues, the strong remittance flows will continue,” said Nanda.

With $69 billion of NRI money received in 2012, India is the topmost country for inward remittances, according to a study conducted by the World Bank.