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Rupee falls, remittance rises.

SATYENDRA PATHAK DOHA THE fall of Indian rupee to a low of Rs14.18 against the Qatari riyal last week has brought cheers to Indian expatriates in Doha.

With Indian expatriates looking to capitalise on the declining value of the rupee against the Qatari riyal, Doha-based exchange companies are witnessing a sharp increase in remittance to the South Asian country.

"A steady fall in the value of the Indian rupee against the US dollar over the last one month has sparked a flurry of remittance from Qatar, which has its currency pegged to the Greenback," said Zubair Abdul Rahman, operations manager at the Al Zaman Exchange.

He said the remittance through Al Zaman Exchange in the first three months of 2012 were up by 30 percent in terms of volume compared to the corresponding three months of 2011.

However, he was of the view that the sudden depreciation of the Indian currency does not usually benefit low-income or bluecollar workers, who comprise a large segment of the remitting population in Qatar.

"In the last week or so, we have seen increased activity in the large-ticket segment. These are from people who send money for investment rather than domestic commitments. Indians working in Q-companies are even going for loans to take advantage of the situation.

Right now we are offering Rs14.10 for one Qatari riyal. The exchange rate above Rs14 is a big trigger point for them. This is the time when they use all their resources to collect Qatari riyals and remit them to India," he said.

Senior officials at Habib Qatar International Exchange and Al Dar Exchange also said they noticed an increase in transactions from the middle to high-income bracket.

The Indian rupee logged its second straight weekly loss in the new fiscal year that began on April 1. The rupee ended the week at 51.3050 to the dollar. It had closed at 51.580/585 on Thursday. In the week, the rupee fell 0.5 percent.

Currency experts expect the fall of the rupee to continue in the coming days.

"We expect the rupee to reach 14.25 for a Qatari riyal or 52 as the next rupee level for a dollar," a senior official of Doha Bank said. "The Indian rupee will continue its downward trend in the near to medium term due to high inflation and lower investments by foreign institutional investors in India.

The Indian currency, however, is likely to witness upward trend towards the end of this year and might see the level of Rs48 per dollar," the banker added. "The Qatari riyal will continue to fetch more Indian rupees for the coming twothree months. It might cross the level of Rs14.5 soon," said Adarsh Shenawa, currency expert at Al Zaman Exchange.

Banking giant 'Citigroup' has also predicted a weak patch for the rupee in coming days given the fragile global growth and weak Indian macro-economic indicators such as widening trade and current account deficits along with high inflation.

"Quality of capital flows to India has been deteriorating with increasing reliance on non-FDI flows to fund current account deficit. The Indian rupee is at the risk of returning to 53-54 level against the dollar," said Citigroup in a recent note. The rupee had touched a record low of 54.30 in mid- December 2011 and fallen nearly 16 percent during that year. KPMG Qatar Partner Gopal Balasubramaniam, however, sees nothing unusual in the slide of Indian rupee.

"I believe the current slide in the Indian rupee is more due to the current state of global economy. The currencies of most of the emerging economies are falling like nine pins. The currencies of Russia, Brazil, South Korea and Indonesia have plunged in the range of six percent to 16 percent since the start of this year.

So the 10 percent fall in the value of rupee against the US dollar is not something which is dramatic considering the situation of the global economy," Gopal said.

"The sentiments are clearly pointing to further weakness as the rupee's fortunes are linked to global crisis. The RBI could sell some of its foreign reserves to cushion the rupee's plunge.

But I'm sure there are other implications which the RBI and the finance ministry may be wary of before resorting to that measure to check the current slide," he said.

"Whilst it is unlikely that the central bank would artificially support the rupee, it is expected that the currency may remain weak for a prolonged period," he said.

Qatar, home to half-a-million Indian expatriates, accounts for nearly 2 percent of the total remittance flows into India.

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Publication:Qatar Tribune (Doha, Qatar)
Geographic Code:7QATA
Date:Apr 15, 2012
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