Tuesday, December 6, 2016

Best time to Send Money to India from USA

After Donald trump's victory and historic onRupee demonetization in India, many of my friends working in living me asking the question whether now is the best time to send money to India from the USA? Well, it certainly looks so. The USD/INR exchange rate is at all time high of 68.34 and very likely to go to 70, so it definitely sounds the best time to send money from India to the USA.

The US dollar or USD, in particular, is rising from last 3 years against INR, particularly after Indian election in 2014 and appreciated against INR, which has lot more than 8% since then. After the victory of Donald trump in US presidential election US dollar has become even stronger against many currencies e.g. GPB, JPY, SGD and AUD and it is expected to continue become stronger and stronger given Trump's campaign of "America First".

By the way, the reason for sending money to India may not be just exchange rate but the long-term view of where you want to settle and which currency you consider as home currency. Since many NRIs, consider INR as their home currency and prefer to keep their money in NRE account rather than keeping in USD in the local American bank, the current high-interest rate of USD/INR 68.34 seems the best opportunity to send money to India from America.

Though, if you want to settle down in the USA and already bought a home and enrolled your kids in USA schools you should not excite with this momentum in the exchange rate as for long-term, it's better for you to keep money in the USA itself.

Another thing, I would like to point that even though NRE fixed deposits seem the best option to keep the Indian currency as interest earned on NRE account is tax-free in India, you must remember that NRE fixed deposit is not safe from bank defaults. RBI or Government doesn't ensure NRE fixed deposit, hence it is better to diversify money in multiple NRE account with different banks, one of the most important reasons to open multiple NRI accounts.

On India side, due to demonetization, all the banks has got a huge deposit of cash and interest rate on FD is fallen down as low as to 6.5% for 1 to 2-year term. The longer term fixed deposit rates are still close to 7% which is not bad.

So, if you plan to send US dollar from the USA and want to invest in NRE fixed deposit, now is the best time because interest rate on NRE fixed deposit will go further go down and may outweigh the profit you make in USD/INR upward movement which I don't believe will cross 70 because that would be a big headache for Government and opposition will directly link that to demonetization. So, RBI will try everything to keep the USD/INR rate under 70 at least for next six month.

Best time to Send Money to India from USA

Oil is also a big factor in USD/INR exchange rate because India imports 80% of Oil and make payment in USD. When Oil price will go down India will need more USD to pay which will further take rupee down. Oil is trading in a range in last six month but you never know.

In short, given the excellent USD/INR conversion rate touching 68 it seems a great opportunity to send money to India from the USA and invest in NRE fixed deposit. The interest rate has gone down in NRE fixed deposit but it is still better than what you can get in local banks e.g. Citibank, Bank Of America or WellsFargo. Given the money in NRE account is fully repatriable, if you want to keep some of your saving in Indian rupees, this seems to be the best time.

Btw, don't forget to revise these tips while sending money to India, remember "a penny saved is a penny earned". Always compare exchange rates and transfer charges before zeroing in any money transfer service for sending money to India. You can use ICICI Money2India, Xoom, Remitly, Remitly Express, Transferwise, Ria, Transfast value+, Transfast Fasttrack, Axis bank (Fixed), Remit2India (fixed) and Western Union for transferring money from the USA to India.


  1. Yeah, It seems to be a best time to transfer money to India. As the dollar rate is going to rise in coming days we expect their will be too many transaction will take place. Wait for few day and send money to India with best exchange rates. Also search for online offers and discounts given by the money transfer services.

  2. Nice tips there, Javin.

    NRE deposit is a great option to get the best interest and with the option to repatriate the money if you need it back, it is a safe option too!