It seems that the black market in Kuwait, or what is known as the underground economy, will not be limited to the Egyptian pound, as exchange companies have recently recorded a significant decline in Indian remittances to rates that have attracted attention, especially in the past two months. So what has changed with the rupee?
In this regard, relevant sources revealed to Al-Rai that during the past months of July and August, exchange companies observed a sharp decline in the level of Indian remittances, compared to the previous months in 2023, and even compared to the corresponding period last year, as the percentage of declines reached in companies that control the local market has significant shares of Indian remittances at about 25 percent, compared to what was recorded during the corresponding period of 2022, reports Al-Rai daily.
As an inevitable result of the above, officials of exchange companies opened an extensive discussion in this regard, as they initially ruled out the idea of the existence of a black market for Indian remittances, driven by the stability of the exchange rate of the rupee, unlike the Egyptian pound (its official exchange rate in exchange companies is about 25 percent higher than its price on the black market).
It is known that the emergence of the black market is usually driven by taking advantage of troubled currencies, as this market is fueled in its expansion by the strong pressures on economies in which the demand for the dollar increases over the local currency.
But surprisingly, the initial results contradicted this opinion, as it turned out that the main reason for the erosion of the exchange companies’ operations of Indian remittances during the past two months was not the decline in their income in Kuwait or the decrease in their numbers at impressive rates, but rather the presence of currency traders who convert the Indian rupee similar to the Egyptian pound.
The sources said that it has been observed in the recent period that there has been an increase in the activity of transfers carried out to India by individual merchants who publish advertisements on social media in which they court Indians by offering to carry out their transfers at competitive prices while giving them additional benefits, to such an extent that even exchange companies that usually offer cheaper have begun to do so. Prices are losing part of their market share due to the cheaper prices offered by currency traders to compete with the official financial system in attracting its clients.
Moreover, dealing with individual currency traders is of additional importance, especially for low- and middle-income workers, as the families of the majority of these workers live in places somewhat far from the money delivery centers in their country, which requires them to assign someone to move to the centers where their money is received, and this requires effort and cost of transportation, unlike the current Indian money delivery merchants who provide the service of delivering money door to door without an additional fee and to all banks, and in a record time of up to 15 minutes in some places, it is also possible to transfer via the “Cash Phone” feature, according to what one of the merchants published in messages.
On the other hand, it is learned that some exchange companies complained to the Central Bank of Kuwait “verbally” about the emergence of a black market for Indian remittances, and that this market greatly affects the volume of their operations and thus their financial performance saying there is a need for regulatory intervention to combat such operations, as they may involve suspicions of money laundering.
The sources explained that the Central Bank has not yet responded in this regard, ruling out that it will present any new proposals related to this based on previous experiences, during which the Central Bank confirmed that it is outside the scope of any legal text that allows it to stop transferring any funds abroad during any of the following days.
The stages that the enforcement procedures of Law No. 106 of 2013 go through regarding suspected money transfers, whether internal or external, while he pointed out that as a cash official he is not concerned with tracking individual currency traders, or any of the unofficial money transfer systems.