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Brexit’s impact on remittance has been felt throughout the world. Last year, migrant workers in the UK sent home an approximate $24.9bn making it the fourth-largest source of remittances in the world. This year, the World Bank reported that the stirling has shrunk to 14.6 per cent and 13.2 per cent against the dollar and euro respectively. This means that people back home are receiving less for their money. The savings of migrant workers are thousands of euros less than they used to be before the Brexit vote. A weak pound means a drop in remittances, with migrants working harder and sacrificing other savings to make up for that decline.Impact of Brexit on Remittance-Receiving CountriesThe repercussions go way beyond individuals and families having to tighten their belts. The native countries of these recipients suffer, too. For 25 countries, remittances provides more than 10% of their GDP.Eastern EuropePoland, Hungary, Latvia, Slovakia, Czech Republic and other so-called EU8 countries that joined the EU in 2004 have become the second largest recipients of remittance flow from the U.K. after Germany. Remittance makes up between 3-6 per cent of GDP for many of these nations.In Hungary, the Magyar Nemzet reported that the GBP declined in value roughly HUF 70 since the UK voted to leave the European Union in June, and by HUF 100 since last November. Further deviation was expected by the end of this year. Remittances make up about USD 3.6 billion, or three percent of the total GDP of Hungary's economy, according to a report in Hungarian business daily Világgazdaság. In 2015, Time Magazine reported that Hungarians in the UK send back an annual average of USD 7,700 per economic migrant. The result could be several billions of forints in losses, according to the Magyar Nemzet report.Other Regions and Developing CountriesNigeria, India and Pakistan list among the top three countries that receive remittance from Britain. In 2015, Nigeria received almost $4 billion, India received $3.6 billion and Pakistan just over $1 billion. Each of these regions have fragile economies, and millions of people who depend heavily on remittance of overseas workers for support. Each has now have to had to acclimate themselves to a devalued pound and have come to expect a lot less than they used to.Although other countries such as Bangladesh, Pakistan and Nepal received less remittance from Britain than India, their more fragile economies make them more dependent on the remittance for substance. Respectively, remittance from UK makes up about 8.5 per cent, 7 per cent and 29 per cent of each of these countries GDP, respectively.In countries such as these, remittance pays for education, startups and healthcare. It, also, lifts families and communities out of poverty and spurs development. Kenya is another example of a region that lost millions of dollars in remittance, according to the UK-based think tank Overseas Development Institute (ODI) in September.The list of countries that suffered because of Britain’s devalued currency continues.The Future?Some experts believe that the fall of the stirling will prompt more migrant workers to leave Britain and fewer to move there. Jonathan Portes, an economist at the UK’s National Institute of Economic and Social Research adds that migrant workers may feel less welcomed making them less likely to stay and more likely to tell their friends to keep away.Other research by the UK’s Department for Work and Pensions found that many migrant workers in Britain relocated to healthier economies with stronger currencies during the 2007-09 financial crisis. Experts say that more migrant workers are likely to follow that pattern now.In short, the Center for Global Development predicts a dreary next two years where the UK economy may stagnate leading to a recession that will, further, lower the value of remittances.

Indian Rupee is likely to touch 79.5 INR/1 USD in 2022.The Indian Rupee has fallen to an all-time low against the US dollar, reaching levels of 1 USD to INR 76 in the recent past. UBS strategists expect the INR to weaken to 77 per dollar by the end of the year - more than 5% weaker than current levels - and depreciate further to 79.5 per dollar by September 2022.If you are sending money to India from the US, a weaker rupee means more value for the same amount of dollars. Set up exchange rates alerts to get notified when the USD vs. INR reaches 79 rupees per dollar.India received $83 billion in remittances in 2020, according to the World Bank. India is the top recipient of remittances globally, followed by China, Mexico, and the Philippines. Despite the worrying forecast, remittances to India continue to out-perform. Compare multiple money transfer specialists before sending money from the US to India or from India to the US.The fall of INR vs. USD is driven by several factors, including weak export numbers, a drop in domestic consumption, increased energy prices, and fear of soaring inflation, among other reasons.Here are some of the major factors that have impacted the fall of the Indian Rupee against the US dollar:Rising Current Account DeficitThe Current Account Deficit refers to the net amount of a nation's imports minus the exports during a year, also known as External Balance.The Current Account Deficit is considered an important metric for gauging a country's economic health and stability. It gives you the difference between the inflow and outflow of foreign currency. A large trade deficit signals greater reliance on foreign capital inflows and further weakens the Indian rupee in the Forex market.Even as all the economies in the world are going through an economic slump, an disproportionate trade deficit will result in creating a weak rupee value against the US dollar.India's current account balance posted a surplus of $6.5 billion, which is 0.9 percent of Gross Domestic Product (GDP) in the first quarter of the financial year 2021-2022 (Q1: FY 21-22) as against a deficit of $8.1 billion, which is one percent of GDP in the fourth quarter of the financial year 2021-2022 (Q4: FY 21-22).The current account surplus was $19.1 billion, which was 3.7 percent of GDP in the previous financial year (Q1:FY20-21) for the same period, according to the Reserve Bank of India (RBI).Significantly narrower current account deficits than in the first half of the last decade, and foreign exchange reserves at historically high levels have strengthened India's external position and reduced its vulnerabilities to external shocks. However, it remains vulnerable to volatile global crude oil prices as approximately 45% of all imports are energy-related.Given that net exports are projected to drag on growth over our forecast horizon, the current account deficit is likely to remain an important factor driving INR performance relative to USD over our forecast horizon.India's current account deficit is expected to rise due to increased crude oil prices, expansionary fiscal policy, and low GDP growth.Impact Of Crude Oil Prices On USD vs. INRHistorically, the price of oil has been inversely related to the price of the U.S. dollar. The explanation for the relationship between oil prices and currencies is based on two primary factors:Crude oil contracts are in USDUSD is the most traded currency in the worldTo trade crude oil, countries around the world use barrels for units and USD in currencies. Post-Covid restrictions, as economies start their long journey to recovery, crude oil prices reached a 3-year high.For a country like India that is highly dependent on crude oil imports, it has a negative impact on the Indian rupee against all major foreign currencies, especially against the USD.When the USD is strong, you need fewer USD to buy a barrel of oil and vice-versa. India needs USD to buy crude oil, so a weaker rupee means you need more rupee to the same amount of USD and barrel of crude oil. Therefore, when the INR falls against the USD, these import costs rise.As a net importer of oil, INR has a huge impact caused by any fluctuation in USD and crude oil prices.Impact Of Interest Rates On USD vs. INRThe first question that comes to our mind is - what is the relationship between interest rates and exchange rates?Let's understand the definition of both interest rates and exchange rates before we explain how it impacts USD vs. INR.Interest is the amount a lender charges to a borrower as a portion of the loan given by the lender, usually expressed as a percentage for a particular period of time.The foreign exchange rate is the value of one currency in relation to another. The relationship is stated as Currency 1/Currency 2, such as USD/INR, where the exchange rate shows the price of the USD in relation to INR.For investors, a high-interest rate means a higher return vis--vis other currencies. To take advantage of the yield, investors will most likely move their investments* to countries with higher returns, which will increase the demand for the currency and further strengthen it vis--vis other currencies.*Investments with a forward cover to protect returns in absolute termsAmid the inflationary pressure, the Federal Reserve is looking at interest hikes as a measure. This will, in return, have an impact on all USD currency pairs, including USD/INR.Keep in mind that beyond the US, interest rate differences between India and other emerging markets beyond the US could also have additional pressure on INR.Other major factors that impact the interest rates are central banks' policies, financial system, government spending, unemployment rates, and inflation.Fiscal Deficit Impact On USD vs. INRA Fiscal Deficit is defined as a net negative in the government's income compared with its spending. A fiscal deficit is usually calculated as a percentage of GDP or total amount spent in excess of income.Current Fiscal Deficit is when the government borrows more money to fund expenses instead of collecting revenues from taxes and other sources. This leads to a decline in total tax revenue, which could impact economic growth.The Current Fiscal Deficit is considered a leading indicator of a country's creditworthiness. When there is a spike in the Current Fiscal Deficit combined with negative exports growth, it may indicate that an economy may be entering a recession, and a higher cost of borrowing is guaranteed.A deterioration of the current fiscal deficit can happen for many reasons. It might simply reflect lower tax revenues due to weak economic conditions. Alternatively, it could also mean that governments are taking advantage of low-interest rates to increase spending.To reduce the deficit, the government needs to decrease spending and increase income. In any case, a spike in fiscal deficit has a negative effect on USD vs. INR.In conclusion, USD and INR are both floating exchange rates, meaning that a currency price of a nation is set by the supply and demand relative to other currencies in the Forex market. However, central banks have various measures to intervene to keep a check on a free-falling or a spike in their exchange rates.Central bank interventions through buying and selling of foreign currencies and setting new interest rates for the country to bolster export competitiveness, help increase foreign exchange earnings, and shore up reserves.Regardless of the steps to stabilize its currency, its fortunes are tied to external factors. The continued weakness in domestic demand growth is likely to keep pressure on INR. Further selling pressure on INR is likely amid rising crude oil prices and a widening trade deficit.If you send remittances regularly, we recommend using a money transfer specialist who offers the highest exchange rates.

Peer-2-peer (P2P) payment apps, also known as money transfer apps or mobile wallets such as Paypal, Venmo, or Cashapp, are popular online payment platforms for business - they are convenient, easy to use, and are highly efficient ways to transfer money. However, with new regulations, using P2P payment apps for business transactions will be subject to taxation in the United States.In this article, we will discuss what is Form 1099-K, who is required to file taxes under the new rule for P2P users, and what information should be included in declaring to the Internal Revenue Service (IRS).New P2P Tax Laws of 2022 in the US SimplifiedLet's first understand the current tax rule to get a broader picture of the changes.For the current or the old tax rule on 1099-K tax returns filed prior to 2022, the IRS has set thresholds as follows: You have received over $20,000 in gross payment in a calendar year, andYou have settled more than 200 transactions in a calendar year.Now, the new tax rule on P2P Apps for calendar years after 2021, the IRS has changed the threshold as follows:You have received a gross payment that exceeds $600, andApplicable on any number of transaction/s.Put simply - you are required to report your earnings on the sale of goods and services if $600 or more was processed through these platforms. If you cross the threshold, the IRS expects the third-party networks in this case the P2P Apps to issue Form 1099-K to you to report payment transactions.Even if you do not receive a 1099-K, you are required to file the earrings in your income tax return. These new P2P tax laws will impact many users such as gig workers, online sellers, self-employed business owners, freelancers, etc.The new taxation rule for third-party payment networks has been implemented under the American Rescue Plan, the $1.9 trillion stimulus package that came into effect in March of last year. The change doesn't impact 2021 taxes but will impact 2022 tax returns filed in 2023.P2P Payment Apps 2022 Tax FAQsWhat Are the New Tax Reporting Requirements?To reiterate, beginning January 2022, if you receive $600 or more payments for goods and services in the current year, through a third-party payment network, such as Venmo, CashApp, or Paypal, your earnings will be reported to the IRS through Form 1099-K sent by the P2P platforms and income tax return.The tax rule only applies to payments received for sales of goods and services and does not include payments to friends and family.Read Comparison between PayPal, Venmo, and Zelle.What Is a Form 1099-K?Form 1099-K, Payment Card, and Third Party Network Transactions is an IRS form used to report payments for goods and services transactions to improve voluntary tax compliance.Payment settlement entities such as debit/credit card companies including PayPal, Venmo, Stripe, Etsy, and others are required by law to file them with the IRS and share copies with the payment recipient.You would receive Form 1099-K by January 31st of the following year if you received payments in the previous calendar year.What Is Included in Form 1099-K?Your Form 1099-K includes the gross amount of all reportable payment transactions, excluding any adjustments for credits, discounts, fees, or refunded amounts.A Form 1099-K will be sent to you from each payment settlement entity from which you received payments in settlement of reportable payment transactions. A reportable payment transaction covers a payment card transaction or a third-party network transaction.The minimum reporting threshold is meant only for transactions settled through a third-party network. There is no threshold for payment card transactions.What Additional Information May Be Required for Form 1099-K?Your third-party payment provider may request tax information such as your Employer Identification Number (EIN), Individual Tax Identification (ITIN), or Social Security Number to report payments on Form 1099-K properly. Once this information is confirmed, your tax forms can be issued without a hassle.If you cross the reporting threshold for the sale of goods and services on the payment apps, the Form 1099-K will be issued to you at the beginning of the 2023 tax period, and a copy of it will be sent to the IRS.You can also download account statements for any reporting obligations, even if payments received are within $600. If needed, seek a licensed tax expert to assist you.How Can Information on Form 1099-K Be Used for Income Tax Returns?You must report any income listed on your Form 1099-K from your business on your income tax return.Since Form 1099-K may include both taxable and nontaxable income, keeping good records is very crucial. If you receive money from a nontaxable source, such as money received as gift or splitting bills, you need not report on your tax return.Also, make sure that your business books and records mirror your business income. Business income is generally referred to as the gross receipts on income tax returns. Your business income can be in the form of cash, checks, and debit/credit card payments.So consider the amounts shown on Form 1099-K, along with the other payments received, when calculating gross receipts for your income tax return.How to Maintain a Good Record for Tax Reporting?Record keeping is vital for accurate tax reporting. If you receive the Form 1099-K at year-end, you can check your accounting records to see if the income reported to the IRS is accurate. Even if you don't receive Form 1099-K, the income still needs to be reported on your tax return.Go for a record-keeping system that reflects your income and expenses. Also include accounting and payroll records, bank statements, receipts, tax forms, returns, and relevant business-related financial records.Most importantly, set up a business account if you are receiving business payments through a P2P payment platform.Maintain a separate account for business and personal transactions.Having a separate business account and keeping good records can be practical when showing both taxable and nontaxable income sources if the IRS audits your income tax return.If you pay your business expenses using any of the payment platforms, get the invoice or a receipt from the vendor or the contractor to record the amount paid and the details of the business expense. This will serve as evidence for your expenses if the IRS questions the legitimacy of your business expenses.1099-K Guide: What if Multiple Payment Platforms Are Used?The IRS tax rules are the same for all the P2P platforms, including PayPal, Stripe, or Venmo, though it might be enforced differently. If you are receiving business payments from multiple platforms and the collective amounts from sales on these platforms exceed $600, consider speaking to a licensed tax professional for best practices.You can find the contact details on Form 1099-K if you have any questions on the matter.Are Transactions on Zelle Taxable?While this rule applies to most third-party payment networks, Zelle is not included. Only the P2P payment companies that deal with the settlement of funds in business transactions are required to issue 1099 forms to users. Zelle doesn't process payments but facilitates communication via messages between a financial institution and people making the payments.Zelle states that it does not report transactions made on its Network to the IRS, even if the total is more than $600. The new law to provide forms 1099K for information reporting does not apply to the Zelle Network, it added.Will I Be Taxed in the United States for Sending Money Abroad Through a Payment App?Most digital wallets or P2P payment platforms do not support international money transfers. The best way to send money from the U.S. internationally is through online money transfer companies such as Xe money transfer, Remitly, and Western Union.In general, when you send money from the United States, the first $15,000 USD, per recipient will be exempt from taxes by the IRS under the Gift Tax policy. Although sending money as a gift is not taxable, you may need to report it to the IRS. In conclusion, from the beginning of the 2022 tax year, P2P platforms will be required to send Form 1099-K to users and the IRS to report payment transactions totaling $600 or more in a financial year. While this does not have any impact on international money transfer yet, existing laws that govern cross-border transactions will be applicable including Gift Tax.