The strength of the US dollar against Asian currencies is leading to a surge in remittances from migrant workers in the Gulf Arab region, said Gulf News.
Most Gulf currencies are pegged to the dollar, encouraging expatriates to take advantage of the strong dollar, benefiting their home countries – India, the Philippines and Pakistan.
The decline in oil prices, however, is expected to gradually reduce demand for these migrant blue-collar workers and so eventually reduce remittances next year, say industry executives.
Projects have been cancelled in Dubai but the remaining major projects, such as the new terminal at Abu Dhabi International Airport and the planned canal through Dubai, have so far kept demand up for migrant labor.
Rajiv Raipancholia, chief executive of UAE-based Orient Exchange and secretary of industry body Foreign Exchange and Remittance Group (FERG), expects a 5% remittances rate for the UAE in 2016, down from 10 to 15% in 2015.
On the topic of low oil prices, Reuters reported that Fatih Birol, the executive director of the International Energy Agency, expects the price of crude oil to stay at around $45 a barrel “for a long time”.
“Cheap oil is causing oil companies big problems,” Birol explained, adding that “This year, they have reduced their investments by a fifth. Never in the history of these companies has there been an annual reduction as strong as this year.”