Weaker dollar and high inflation double blow to expatriates

THE weakening of US dollar and the strengthening of most Asian currencies coupled with the high inflation in Qatar have dealt a double blow to Asian expatriates who remit money regularly through the exchange houses.

For instance, an Indian sending money home is “losing” at least Re1 to Rs1.5 to every Qatari riyal, compared to the exchange rates that existed a few months ago.

The rise in inflation in Qatar, the local currency being pegged to the dollar, and currencies in countries like India, the Philippines, Bangladesh, Nepal and Pakistan gaining strength – are some of the reasons pointed out by managers at various exchange houses for the “poor returns” to the expatriates.

“Even though the volume of the overall remittances to South Asia and the Philippines has increased significantly, the rise could be associated with more people coming to live in Qatar,” said Syed Abu Fuzail, senior vice president at Habib International Exchange.

“This time of the year is a holiday period, but compared to the same time last year, we have witnessed an increase of 15% in overall remittances to South Asian countries,” he said.

People who remit money through exchange houses comprise workers, middle class, and upper class.

The labourers are under enormous pressure to send money home regularly regardless of the exchange rates, since whole families depend on that income.

“A low wage worker has no alternative but to send money every month. A weaker dollar means less money for his family,” explains A V Brahma Rao, general manager at Trust Exchange Company.

The middle-class earner on the other hand usually judges all options available and sends his money by means most profitable. If the currency back home is depreciating against the dollar, he will send the money on the spot, but otherwise hold on to the money until the situation improves.

The upper class, comprising top professionals, usually saves and invests money in several schemes. “These people can even afford to open fixed foreign currency accounts – euro or dollar – back home and leave the money there to mature to yield higher profits,” Rao added.

The euro has been strengthening against the dollar, which has lost considerably in the recent past. “The dollar will at some point come back,” he said.

Mohamed Gulam Mustafa, manager, Arabian Exchange Company, pointed out that Bangladeshis usually watch the exchange rate when remitting money. “They would rather wait for a time when they can get the most for their riyals and send money in bulk instead. Nevertheless, more Filipinos and Nepalese are sending money home than ever,” he added.

A Bangladeshi who has been sending money for the last three years, dejectedly said, “My family is complaining that I’m sending less money, how should I explain to them that I am still sending the amount that I always did.”

A Filipino agreed but pointed out to the strengthening of the Peso as the reason for him “losing money”.

The foreign exchange market is ruled by changes in market variables, including relative price levels, real interest rates, productivity, product preferences, and perceptions of economic stability. Qatar’s economy has seen a tremendous growth and expansion in recent years.