With the recent rupee slide against the dollar, Non-resident Indian (NRI) investors have the best opportunity to send more money home as foreign portfolio investors exit. Inward remittances are set to rise, especially from the Middle East, the US, and Southeast Asian countries amid a falling rupee. CEO and Managing Direvtor at Unimoni Financial Services, Amit Saxena said, “The rupee's weakening will help increase remittance inflows to India. A significant share of inflows is expected to come from Middle East countries and United States as the Indian diaspora seeks to capture the gains from exchange rate moves.”
The rupee hit a record intraday low of 69.09 to the dollar last week, extending its losses to over 7 per cent this year as Asian's worst-performing currency. It pared some losses to close at 68.47 on Friday. Krishnan Ramachandran, CEO, Barjeel Geojit, said, “Expatriates are set to begin their vacation in July-August coming back to India. At this point of time, they would love to have more rupee proceeds per dollar. We are already spotting a trend of increased remittances from the Indian diaspora.” Foreign flows from NRIs could well be a cushion against drying up foreign portfolio investments. While it may not be sufficient to stabilise the rupee, it could check any sharp plunge.
Last year, India retained the top position as recipient of remittances as non-resident Indians sent $69 billion back home, as per the World Bank. Global remittances expanded 7 per cent to $613 billion last year from $573 billion in 2016. National Securities Depository Ltd data revealed that foreign portfolio investors have sold domestic securities worth a net Rs 47,872 Crore this year, compared with a net investment of Rs 1.48 Lakh Crore between January and June last year. KM Chandrasekhar, former cabinet secretary and ex-part time chairman of Federal Bank said, “If the rupee continues to fall, setting a trend, non-resident Indians will start remitting money back to India. Indians living abroad are now on a watch on how to capture gains from the rupee's weakening.”
Reserve Bank of India data revealed that net remittances of India were at $16.4 billion between January and March as compared with $16.2 billion in the corresponding period last year. India received record remittances of about $70 billion amid a falling rupee trend in 2013. Experts said it is expected to cross the earlier mark if the rupee extends its weakening trend.
