Indians in the UAE are considering how to best take advantage of the rupee's record-low level against the US dollar, hit by the Trump administration's high tariffs.
The US on Wednesday doubled its tariffs to India to 50 per cent – the highest for any Asian country. That resulted in the rupee falling to a record of 88.3075 against the dollar during intraday trading on Friday before settling 0.65 per cent lower at 88.1950, its biggest one-day loss since May.
That also marked the first time the currency breached the 88-rupee-per-dollar mark. The rate, as of Saturday, stands at about 88.15 rupees.
'More than usual'
A weaker currency tends to increase remittances, especially in emerging markets. India is one such destination, with a substantial number of citizens working abroad and their families receiving money on a regular basis.
“Perfect timing, as salaries just came in,” Anthony Fernandes, an international media strategist in Dubai, told The National.
“Everything is expensive back home … with this comes some relief and [my family] can manage costs more easily and daily expenses feel lighter.”
The favourable exchange rate also means each dirham goes further in India, said Ian Saldanha, a resident of Dubai.
“I try to take advantage of these opportunities whenever they arise,” he told The National.
But despite more cash at their disposal, Indian families are prudent, as they still feel the pinch of rising prices for imported items and essentials.
“It feels like the right time to support them with bigger [sums] rather than just regular expenses … for my family, the extra value from remittances really helps – daily expenses, education costs and even savings become easier to manage,” Hozefa A, another Dubai resident, told The National.
The money would be “mostly for long-term things … [such as] for home improvements we’ve been postponing”.
“So, while the remittances do stretch further, household budgets still need careful planning,” she added.
Tariff-triggered
The tariffs – a move used by the US aimed at punishing New Delhi for Russian oil imports – escalated an economic war with a worldwide ripple effect.
That has caused a lot of concern for India's domestic economy, South Asia's largest, with consumers and businesses wary of its ill effects.
Combined with a global trade slowdown and geopolitical uncertainties, the levies are expected to have a non-uniform impact on the Indian economy, said Dipti Deshpande, a principal economist at Mumbai-based Crisil Ratings.
“Consumer demand – buoyed by healthy rural incomes, lower inflation and interest rates and income tax relief – is expected to remain robust in the coming quarters and support overall gross domestic product growth, while healthy government investment spending should continue to provide buffer,” she said.
However, in the absence of a trade deal between India and the US, a few sectors, specifically smaller businesses, will have to brace for a bigger impact from the tariffs, she added.
Analysts expect the Reserve Bank of India to intervene to support the rupee, although it has so far not given any indication.
Investing in a little caution
Investing in assets is one more option Indians consider when the rupee weakens, taking advantage of a cheaper way to build a portfolio.
“It's a good time to explore small investments … because the same amount I send now can cover more than it usually does,” Ms Hozefa said.
But despite the measure of confidence the weak currency brings, caution is needed, especially in anticipation of any volatility when it comes to exchange rates.
One alternative would be sending money to India for the sole purpose of using that cash there. If money is planned to be used in the source country, for example, in the UAE, it would be better to keep it in dirham or dollar accounts, Mr Saldanha said.
“I’ll likely invest part of it, but with the clear intention of using those funds for purposes in India … in the past, I learnt the hard way that investing in India purely for attractive returns can backfire when exchange rates fluctuate significantly,” he added.
For Mr Fernandes, the safest bet would be fixed deposits. He is also considering investing in mutual funds, but that is in the planning stages.
“I want to proceed with caution, given the current market situation,” he added.
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The flights
Emirates flies to Delhi with fares starting from around Dh760 return, while Etihad fares cost about Dh783 return. From Delhi, there are connecting flights to Lucknow.
Where to stay
It is advisable to stay in Lucknow and make a day trip to Kannauj. A stay at the Lebua Lucknow hotel, a traditional Lucknowi mansion, is recommended. Prices start from Dh300 per night (excluding taxes).
The specs: 2018 Alfa Romeo Stelvio
Price, base: Dh198,300
Engine: 2.0L in-line four-cylinder
Transmission: Eight-speed automatic
Power: 280hp @ 5,250rpm
Torque: 400Nm @ 2,250rpm
Fuel economy, combined: 7L / 100km
Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
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THE SPECS – Honda CR-V Touring AWD
Engine: 2.4-litre 4-cylinder
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Terror attacks in Paris, November 13, 2015
- At 9.16pm, three suicide attackers killed one person outside the Atade de France during a foootball match between France and Germany
- At 9.25pm, three attackers opened fire on restaurants and cafes over 20 minutes, killing 39 people
- Shortly after 9.40pm, three other attackers launched a three-hour raid on the Bataclan, in which 1,500 people had gathered to watch a rock concert. In total, 90 people were killed
- Salah Abdeslam, the only survivor of the terrorists, did not directly participate in the attacks, thought to be due to a technical glitch in his suicide vest
- He fled to Belgium and was involved in attacks on Brussels in March 2016. He is serving a life sentence in France
About Seez
Company name/date started: Seez, set up in September 2015 and the app was released in August 2017
Founder/CEO name(s): Tarek Kabrit, co-founder and chief executive, and Andrew Kabrit, co-founder and chief operating officer
Based in: Dubai, with operations also in Kuwait, Saudi Arabia and Lebanon
Sector: Search engine for car buying, selling and leasing
Size: (employees/revenue): 11; undisclosed
Stage of funding: $1.8 million in seed funding; followed by another $1.5m bridge round - in the process of closing Series A
Investors: Wamda Capital, B&Y and Phoenician Funds
Three trading apps to try
Sharad Nair recommends three investment apps for UAE residents:
- For beginners or people who want to start investing with limited capital, Mr Nair suggests eToro. “The low fees and low minimum balance requirements make the platform more accessible,” he says. “The user interface is straightforward to understand and operate, while its social element may help ease beginners into the idea of investing money by looking to a virtual community.”
- If you’re an experienced investor, and have $10,000 or more to invest, consider Saxo Bank. “Saxo Bank offers a more comprehensive trading platform with advanced features and insight for more experienced users. It offers a more personalised approach to opening and operating an account on their platform,” he says.
- Finally, StashAway could work for those who want a hands-off approach to their investing. “It removes one of the biggest challenges for novice traders: picking the securities in their portfolio,” Mr Nair says. “A goal-based approach or view towards investing can help motivate residents who may usually shy away from investment platforms.”
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THE NEW BATCH'S FOCUS SECTORS
AiFlux – renewables, oil and gas
DevisionX – manufacturing
Event Gates – security and manufacturing
Farmdar – agriculture
Farmin – smart cities
Greener Crop – agriculture
Ipera.ai – space digitisation
Lune Technologies – fibre-optics
Monak – delivery
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Nybl – machine learning
Occicor – shelf management
Olymon Solutions – smart automation
Pivony – user-generated data
PowerDev – energy big data
Sav – finance
Searover – renewables
Swftbox – delivery
Trade Capital Partners – FinTech
Valorafutbol – sports and entertainment
Workfam – employee engagement
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5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
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The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
Tamkeen's offering
- Option 1: 70% in year 1, 50% in year 2, 30% in year 3
- Option 2: 50% across three years
- Option 3: 30% across five years
