Indian Rupee Weakens to Near 23.5 Against UAE Dirham: Time to Remit?

Dubai: The Indian rupee has resumed its slide against the UAE dirham, currently nearing the 23.5 mark—a level not seen in nearly two months. For Indian expatriates in the UAE, this shift offers a more favourable remittance rate compared to the 23.2–23.3 range observed in recent weeks, prompting many to consider whether now is the right time to send money back home.

Why is the Rupee Declining?

The depreciation of the rupee is being driven by a combination of global and domestic economic factors. A sharp escalation in geopolitical tensions, particularly following Israel’s reported strike on Iranian nuclear facilities, led to a sudden surge in oil prices—up by nearly 10% in hours. For a country like India, which heavily relies on oil imports paid in US dollars, this development places added pressure on its currency.

Additional concerns stem from ongoing trade uncertainties with the United States. With no agreement yet on a potential trade deal and a July deadline approaching, markets remain cautious. Moreover, the Reserve Bank of India’s recent 0.5% interest rate cut has made the rupee less appealing to foreign investors, contributing further to its decline.

Could the Rupee Fall Further?

Market analysts suggest that if geopolitical tensions persist and oil prices remain elevated—particularly above $85 per barrel—the rupee may weaken further, potentially reaching 87 against the US dollar. This would bring the rate against the UAE dirham closer to 24.

While the Reserve Bank of India holds substantial foreign reserves to mitigate volatility, its current stance appears non-interventionist. The last time the rupee neared 24 against the dirham was in early February, when it briefly touched 23.9.

Strategic Time to Remit?

Given the recent movement, many Indian expats see this as a timely opportunity to maximise remittances. During April and May, the rupee held firm between 22.9 and 23.1, offering limited returns for remitters. The current dip, therefore, may present a short-term advantage.

Experts caution, however, that while the rate is favourable now, continued weakening could have broader economic consequences for India, including higher inflation and a widened current account deficit. Nonetheless, if the US dollar continues to strengthen on the back of robust economic indicators, and if India pursues further monetary easing, the rupee may face continued downward pressure.

Bottom line: For those planning to remit soon, taking advantage of the current rate could prove beneficial, especially with market uncertainty still looming.