UAE Remittances to India, Philippines Surge After Trump's Win

Remittances from the UAE have surged recently, as Asian currencies experienced a downturn following Donald Trump’s win in the U.S. presidential election. According to a representative from the super app Botim, remittances to India and the Philippines saw a notable increase. Transaction numbers rose by 3% for India and 4% for the Philippines peso during the first 12 days of November 2024, compared to the same period in October. Additionally, Nepal and Bangladesh saw a month-on-month remittance increase of 36% and 32%, respectively.

Impact of U.S. Elections on Currency Markets

The election results have driven the U.S. dollar up while several Asian currencies weakened. Adeeb Ahamed, Managing Director of LuLu Financial Holdings, highlighted the positive response from UAE expats who took advantage of the favorable rates to send money home, particularly to India and other regions.

“The recent U.S. elections significantly impacted global financial markets, driving up the dollar and leading to declines in several Asian currencies,” Ahamed stated. He noted that UAE customers have increasingly used remittance services to maximize the value of funds sent to their families.

Remit Now or Hold?

Experts are divided on whether now is the best time to remit funds. Vijay Valecha, Chief Investment Officer at Century Financial, suggests that waiting may be beneficial. He explained that the dollar’s bullish trend could continue, strengthened by anticipated U.S. fiscal policy shifts and trade tariffs under Trump’s administration.

Naveed Ali, Director of Finance at Zand Digital Bank, echoed similar sentiments, advising those who can tolerate some risk to hold off on remittances in hopes of better exchange rates. Ali noted that the Federal Reserve’s high interest rates and economic conditions could keep the dollar strong, applying continued pressure on currencies like the Indian rupee and Philippine peso.

Market Outlook

The short-term market outlook for currencies like the rupee and peso remains uncertain, affected by factors like global economic trends, domestic inflation, interest rates, economic growth, and geopolitical risks. Naveed Ali emphasized that a strong U.S. dollar would likely keep pressure on Middle Eastern and Asian currencies in the near term.

Vijay Valecha explained the ongoing impact, stating, “The aftershocks from Trump’s victory are evident as the dollar has risen to levels last seen after the Euro fell under tariff concerns.” Trump’s stance on raising import taxes, particularly against China, could lead to further currency volatility, affecting the Chinese yuan and other economies heavily dependent on exports to the U.S.

Outlook for the UAE Dirham

Given the UAE dirham’s peg to the U.S. dollar, experts believe the dirham may benefit in this economic environment, with its stability reinforced under a strong dollar. For UAE residents, this means enhanced buying power on remittances, offering a strategic advantage during favorable exchange fluctuations.

In summary, the UAE remittance market is witnessing increased activity as expats capitalize on the strong dollar. However, experts suggest that those who can afford to wait might find even more advantageous rates in the future as the dollar’s trend remains bullish in the wake of Trump’s policies and broader global economic shifts.