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With The Indian Rupee Fluctuating Is It The Best Time To Send Money Home?

November 29th, 2019

It is no surprise that India is the single largest remittance market in the world. The large diaspora of the Non-Resident Indian (NRI) population sent over $79 billion back home in 2018. India has held the top spot for a while and has witnessed a considerable uptick in remittances from $62.7 billion in 2016 to USD 65.3 billion 2017 – and then a much sharper jump of almost 14% in the second half of 2018, primarily triggered by the disastrous floods in Kerala.

A huge number of Indians continue to migrate for work and education every year. With higher levels of education and better work prospects, the remittance ecosystem for India is expected to stay robust over the long term. This also means that the NRIs who send money to India need to monitor the exchange rate closely; since the unpredictable trends in the global and Indian economic fronts have seen the Indian rupee falling sharply.

Is it the best time to send money to India?

Well, yes! As an NRI, why shouldn’t you make the most of the opportunity? In the last couple of months, the USD-INR exchange rate has gone from 68.45 on July 6th to 72.28 on September 3rd (interbank rate). That is a drop of 5.59% in less than two months. While on the one hand, it rings a warning bell on the current economic situation, it also presents great prospects to boost NRI money transfers to India.

What this means is that all other factors remaining constant, the value of money held by NRIs has grown by 5.59% due to the changes in the domestic market in India. India is already witnessing an increase in NRI money transfer to India, especially from the Gulf countries, the US, and the UK.

The currency exchange market is extremely dynamic and timing your remittances may not always be possible. However, expats could ride the trend – that is, send money to India and take advantage of the falling Indian rupee. This can be especially beneficial if, say, an NRI is looking to repatriate money back home to build an asset, make an investment, or repay a loan.

Why is the Indian rupee falling?

There are quite a few factors responsible for this downward spiral. Firstly, the GDP data for FY 2019-20 has not been in line with what was expected. India’s initial GDP growth for 2019 was pegged at 6.2%, which has now been revised to 5.6% by the rating agency Moody’s. Additionally, there has been a slowdown in foreign direct investments (FDI), coupled with weakened domestic consumption demand. This drop was triggered by financial stress among rural/low-income households and weak job creation.

Though the government has taken a host of measures, such as cutting the corporate tax rate from 30% to 22%, lowering the tax bracket of 15% for the manufacturing segment to attract new FDIs, supporting the auto sector, and recapitalising banks through mergers, the outlook will remain negative till domestic consumption – which contributes about 60% of the GDP – picks up.

Will the Indian rupee keep falling?

The long-term growth story for India is still robust and on track. Moody’s expect economic activity to pick up during 2020 and 2021, with GDP growth estimated at 6.6% and 6.7% respectively.

However, in the foreseeable future, the trend points towards a depreciating rupee. Part of the trend is also due to global economic factors like the depreciating Chinese yuan. It’s not just India and China; many other countries from emerging markets (such as Argentina) are also facing turbulent economic times. Naturally, India is not immune to what impacts other countries.

Over the next couple of months, the best exchange rate to send money to India is expected to be between 71.5 and 72.5. It is estimated that if the rupee breaches 72.11, it could slide all the way down to 73.09, but will keep moving pretty much between the estimated figures unless it is affected by other news.

How to take advantage of the situation

The falling Indian rupee presents a lucrative short-term window for NRIs to send money to India and build assets. Money transfers to India can be maximised by keeping a close watch on market trends and currency exchange rates. You will have to invest some time in reading charts and analysing the historical data, as that can help you predict fluctuations in the exchange rate and hopefully hit a sweet spot on remittances.

You could also download an app or set email/text alerts for any significant movement in exchange rates so that you’re on top of what’s happening. Of course, you need to have the right tools and a trusted partner to make your money transfer as efficient as possible. All your hard work will go waste if you don’t have a remittance partner that not only gets your money back home promptly and safely, but also provides competitive rates that don’t eat into your savings.

You need a partner like Xpress Money that operates with utmost transparency, and offers extremely competitive transfer rates that ensure you get the best offer for your hard-earned money.

Xpress Money has built a legacy of secure and prompt money transfer service over the past two decades. Should you have any queries regarding how the currency market works or wish to know the best time to send money back home, we are happy to help you.

Also, Read: What Is The Best Method To Send Money To India?