Overseas Indian Workers are experiencing a tough time with the surprising rise in the value of rupee against dollar. In the last one year the rupee has risen by almost 12% which is quite unbelievable.

Though there isn't much to their rescue but NRI's working in the Gulf seems to have a couple of short term relief's. The first one being attractive rupee deposits offered by banks and the other is hedging.

Around 25 million non-resident Indians hard earned income is declining because of the export units' profit in the country. In the last 6 months, the appreciating rupee has brought down their earnings by 15 percent in rupee terms. No NRI who sends money to India can escape this 'rupee effect' since the dollar is the intermediary currency in determining the exchange value between a non-dollar currency and the Indian rupee.

Typically in a family, one earning member goes out to Gulf to earn livelihood. He earns his salary in one of the Gulf currencies and sends money back home for their maintenance. Consider these data about the comparative rate of a few currencies as of two periods, viz. July 2006 and October 2007: $ - Rs46.80, Rs39.50; UAE dirhams - Rs12.73, Rs10.74; Saudi riyals - Rs12.46, Rs 10.51; and Qatar riyals - Rs12.84 and Rs10.82.

Families of the overseas workers have been badly affected by the appreciating value of rupee. Between January and June 2007, about $16bn - that is Rs62,896 crore - came into India as remittances, a $2bn increase over last year. If a family received a remittance of $1,000 on December 4, 2006, it fetched Rs44, 490. But the same amount on December 4, 2007, was worth only Rs39,330 - Rs5,160 less.

NRIs are now looking forward to other lucrative options to combat the rise of the rupee. Real-estate and equity markets are attracting most of the investments at the moment. According to a report on Trend and progress of Banking in India 2006-07, there has been a total outflow of Rs5, 959 crore from the non-resident foreign currency repatriable fixed deposits during the period April to September 2007. This effectively means that the NRI's have repatriated money from their accounts in India.

FCNR deposits are issued by most banks in major International currencies like the US dollar, British pound, Japanese yen, euro, Canadian dollar, Australian dollar etc.

The Rupee to appreciate by as much as 12% against the US dollar during the last year alone because of the recent boom in the Indian economy.. The interest rates on FCNR deposits are regulated by RBI. The interest payable on foreign currency non-resident (FCNR) deposits is capped at Libor minus 75 basis points and on NRE deposits at Libor. Banks cannot offer a higher interest rate on such deposits and this is worsening the situation.

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