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Do Gulf expats secretly want their home countries to suffer?
Why would you wish for an economic downturn in your own country? Because you want better forex rates, of course.
March 3, 2010 1:20 by kippreport
Kipp overheard a surprising comment the other day. “The British economy is in big trouble. And that’s great news,” said a man in a bar. “Can I buy you a drink?”
The fact that someone was rejoicing at the UK’s looming economic disaster was not particularly surprising. What was surprising, however, was that the person speaking was himself British.
The UK economy is extremely shaky. The ballooning budget deficit, political uncertainty, and the falling value of the pound have left analysts wondering whether the UK may ‘do a Greece’.
So it is even more shocking that someone would wish harm on the economy of their own country.
In the case of the man quoted above, the motivation was pure greed. The Brit, an expatriate living in the Gulf, is paid in a local dollar-pegged currency. The reason he was pleased about the UK’s economic woes is that the falling value of sterling means he gets more British pounds when he transfers money home.
Considering the pure mathematics, it is easy to see why he was pleased. A few years ago, you needed to earn 7.5 UAE dirhams to buy one British pound. Now, a mere AED5.5 will buy you GBP1. If our British expat was to transfer his entire salary back to the UK at the current rate, he has had, in effect, a 36 percent salary increase – all thanks to mere forex rates.
Given the sheer scale of remittances by Gulf expatriates, the issue of currency exchange rates is obviously an emotive one. Back in 2008, it even led to riots in the UAE: A group of Indian workers caused a disturbance over pay, in a situation exacerbated by the rupee’s rise against the dirham, which meant that they could send less money home.
But is it right to wish for a downturn in your own country’s economy, in the hope of better forex rates? After all, if the UK ‘did a Greece’, some Gulf expats may benefit. But if it ‘did an Argentina’, no one would.