Expats in the UAE who are planning to send money to the UK or Europe may find November to be a particularly advantageous month. As exchange rates for the British pound and euro are expected to shift positively. An analysis by Gulf News indicates that this month could be the perfect time to enhance the value of remittances, given the weakening trends of both currencies against the UAE dirham, which is pegged to the robust US dollar.
The Key to Maximizing Your Remittances
Being aware of whether a currency is likely to strengthen or weaken in the near future can assist expats in optimizing their remittances. Amit Trivedi, a forex analyst based in the UAE, stated, “When a currency weakens, the exchange rate becomes more favorable for those sending money abroad. If you wait for a currency to drop, you can get more value for each dirham.” On the other hand, if a currency is on the rise, expats might want to send money sooner to secure a better rate.
British Pound: Best to Delay Transfers for Now
The British pound has been gradually weakening due to a slowdown in UK inflation and the potential for further interest rate cuts from the Bank of England. Trivedi pointed out that the pound recently fell after UK inflation reports showed a slower-than-anticipated rate. At present, the pound is approximately 0.209 against the UAE dirham, and analysts recommend postponing remittances, as better rates may be available in the coming weeks with the pound likely to decline further.
“With a strong US economy and possible rate hikes by the Federal Reserve, the dollar is expected to strengthen, which will add pressure on the pound,” Trivedi explained. A declining pound suggests that expats may want to wait before making transfers to the UK until the rates become even more favorable.
The impact of a Weakening Pound on Investments
In addition to remittances, a weakening pound affects investments significantly. As the pound falls, many investors become hesitant to put their money into UK assets or shares, particularly those denominated in US dollars. Anil Pillai, a banking analyst based in Abu Dhabi, noted that the current economic situation in the UK is leading to lower deposit rates, which makes it less attractive for expats to keep their funds in UK accounts. “With deposit rates dropping from 5% to 4.75%, some investors might look for better options to achieve higher returns,” Pillai remarked.
Euro Also Expected to Decline, Boosting Remittance Value
Similar to the pound, the euro has also seen declines in 2024, currently trading at around 0.92 against the US dollar. This decrease has prompted more expats in the UAE to send money back to Europe. The Eurozone is experiencing comparable rate cuts, which have increased the interest rate disparity between the US dollar and the euro. Trivedi mentioned, “Expats can anticipate the euro to stay low, with further rate cuts likely making remittances to Europe more cost-effective in the coming weeks.”
Pillai supported this view, stating that the euro’s decline aligns with predictions from leading global investment banks. He pointed out that while the euro may continue to fall, the shift won’t be significant enough to discourage UAE expats, who stand to gain from increasingly favorable rates when transferring money to European nations.
Bottom Line: November is a Great Month for UAE Expats to Send Money Home
With the euro and the pound both on a downward trend, UAE expats have a fantastic chance to take advantage of favorable remittance rates when transferring money to the UK or Europe. By keeping an eye on exchange rates and timing their transfers wisely, they can achieve significant savings, ensuring that each dirham sent abroad goes further. With this knowledge, expats can strategically plan their remittances, maximizing the financial support for themselves and their families back home.
