The last few weeks have seen many happy Indians across the world because of the weakening rupee. The Indian currency has significantly depreciated this year, resulting in large volumes of remittances being sent by Indians to their families or own bank accounts back home in India. As a global money transfer brand, we have seen a 15 – 20 percent rise in remittances to India through our channels, since January this year.
Though Indian expats are rejoicing because of the additional money they are gaining, there is also a sense of uncertainty in their minds.
Is the Indian Economy on the brink of a crisis?
Well, to put all the speculation to rest, the Indian economy is in a healthy condition and is only set to grow from strength to strength. The depreciation of the Indian rupee is not a reflection of the Indian economy, but a result of the US dollar gaining over the last few months.
There are also a bunch of external factors that have affected the rupee – the devaluation of the Yuan in the last quarter of 2015, the revision of the interest rates by the Fed by 25bps in December 2015 and billions of dollars going out of India in the first few weeks of January 2016 leading to the recent crash in the stock markets are a few factors which have hit the rupee adversely.
In 2016, the Rupee has fallen considerably, from 66.92 to a dollar at the beginning of the year to 68.67, being its recent low last week. This rate is very close to the lowest the Indian Rupee had ever reached – 68.85 in August 2013. Looking at the current scenario, my prediction is the rupee could fall further and soon breach the 68.85 mark.
However, the rupee is not the only currency that has seen the downward trend. The Rouble, Euro, South African Rand, Malaysian Ringgit, Peso etc. have also seen all time lows over the last few weeks. The Russian ruble depreciated by almost 9% in January itself. If we see this depreciation, in terms of percentages, value erosion of these currencies is much higher than the Indian rupee. In fact, the Peso has hit its lowest in 6 years.
Therefore, this is a good time not only for Indian expats but other nationalities as well, to use this weakening currency to their advantage and get more value out of the money that they remit.
Written by Sudhesh Giriyan, COO, Xpress Money