A sharp depreciation in the rupee in June-July saw a sharp rise in the quantum of money remitted abroad for gifting purposes and for purchase of immovable property. According to the latest data released by the Reserve Bank of India (RBI),the money sent for these two purposes during the period hit a five-year high.
The sum sent for purchase of immovable property was $29.2 million in the two months over four times more than the $6.7 million that was sent during the same period last year. In July,the outward remittance for purchase of property hit an all-time high of $20.6 million as the rupee fell. By August,the RBI moved in to block fresh investments in immovable property abroad and other discretionary spending.
The money sent as gifts in the two-month period also showed a significant increase,adding up to $47.3 million as compared to $42.8 million during the corresponding period last year. In comparison,the money sent for studies abroad was $22.6 million in June-July,up from $20.4 million in the same period last year.
However,the total amount remitted abroad for all purposes fell from $212.7 million in June-July last year to $202 million in the two months this year.
Wealth managers confirmed that the remittances abroad were spurred by fears of further depreciation of rupee. There was a lot of uncertainty in the market about where the rupee was headed and people who had planned expenditure such as purchase of property hurried, said Atul Singh,MD & head at Merrill Lynch Wealth Management.
It could have been done in anticipation of a further weakening of the rupee,as that would have further depleted the value of the money they had to remit, said Vishal Kapoor,GM,wealth management,Standard Chartered Bank. On the other hand,people seemed to curb their discretionary expenditure during that period. Money remitted for travel witnessed a sharp fall to $2.1 million,as compared to $8.5 million in June-July last year.
In May-July this year,the rupee depreciated by 12.4 per cent,sparking concerns that it would slip to levels between 65 and 70.