Will Indian Expatriates in the UAE Benefit from Dipping in Indian Rupee?

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Indian rupee took the plunge in the beginning of August 2019 falling as low as 1.4% against the USD. The Indian rupee touched as high as 19.21 against the UAE currency because Indian stocks crashed. Not only this, experts warned that it could cross 20 against the UAE dirham in the coming weeks because of economic slowdown concerns and funds outflow.

Reasons behind the Dip in Indian Rupee

There are several factors why the Indian rupee is taking a plunge. One of the main reasons is that the rate of growth in India has slowed down. There are significant indicators of a temporary slow-down in the economic growth of India’s economy which is reflected in the Indian stock market reaction that crashed on 5th August 2019. In fact, July 2019 was also amongst the worst performing months for the stock market of India.      

What does this mean for the Indian Expats living in UAE?

Well, there is a definite advantage for Indian expats who consistently remit money home because they are gaining from the dip in the currency.

For Indian expatriates whose family members solely depend on their income will now be able to send home more money. It will be as if their salary has increased.

Another ways that Indian expatriates can take advantage of the Indian rupee dip are by making an investment in bonds & interest accrued securities.

Does it make Sense to Opt for Personal Loans from the UAE’s Bank to Prepay Home Finances in India?

Many Indian expats who are living in the UAE have opted for home loans from Indian banks for buying properties in India. With a rising interest rate cycle, the rate of interest on the home loan has significantly increased especially after the dipping in Indian rupee. Thus, it is an ideal time to borrow personal loans from UAE banks and financial institutions.

The reason being, the personal loan interest rate in UAE is low when compared to the interest rate charged on home loans in India. So, it is worth opting for personal loans in the UAE to repay home loans in India especially when the currency has been dipping.

Although the rate of interest in the UAE is higher than the interest rate charged in the US on a personal loan, they are much cheaper than the interest rate offered in India on personal loans. Therefore, it definitely makes sense to procure a consumer loan from the UAE bank and then remit money by taking advantage of the favorable exchange rate to prepay your home loan either in full or part.

However, when you finally make a decision to prepay your mortgage, be sure you consider the significant difference in the rate of interest between the UAE banks and Indian Banks and also consider whether any prepayment fees or penalty your Indian bank might charge you. So, prepay your mortgage only if you are saving in interest outgo.   

The Bottom Line

Thus, Indian expats who are living in the UAE can take benefit from the dipping in Indian Rupee. They can either opt for personal loans from UAE banks to prepay mortgage in India at a low interest rate. Else, they can use extra rupees that their UAE dirhams are earning for investing in other things as per their financial needs and objectives.

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