Indian rupee set for further gains, forcing UAE expats to delay remittances

Dubai: The Indian rupee’s recent surge has strengthened expectations of further gains, leading many UAE-based Indian expats to delay sending money home in anticipation of better exchange rates.

The rupee jumped more than 1% on Tuesday to around 90.29 against the US dollar, from a close of 91.53 a day earlier. Against UAE dirham, rates were ranging 24.8-24.9 last week, but over the past two days the currency value has risen to between 24.4-24.5 currently. (Check live forex rates here.)

The move followed an India–US trade agreement that boosted investor confidence and encouraged foreign inflows, alongside reported intervention by the Reserve Bank of India in the spot market.

Market participants said the rally reflects a broader constructive trend rather than a short-term spike. “The pullback is corrective in nature, with the broader higher-high, higher-low structure still intact on higher time frames,” analysts said, referring to the rupee’s recent retreat from levels above 92.

The dollar-rupee pair had failed to sustain levels beyond 92 earlier this month, before pulling back into what traders described as a consolidation zone of 90.20 to 91.20. The current move signals renewed confidence that the rupee’s strengthening cycle is not yet over.

Signals favour appreciation

From a near-term technical perspective, analysts say the outlook remains supportive. “The near term technical structure remains constructive,” market participants said, adding that “a break below 90.50–90.80 could open the way toward 90–89.80 levels.”

For Indian expats in the UAE, these levels are closely watched. A stronger rupee means fewer dirhams convert into fewer rupees, reducing the value of remittances. As a result, many remitters are opting to wait, betting that the rupee could strengthen further in the coming sessions.

Analysts also noted that a softer dollar-rupee pair has capped short-term upside in domestic bullion prices in India, even though “the medium-term trend for precious metals remains supportive.”

Trade deal changes sentiment

The key trigger behind the rupee’s surge was a trade deal announced by US President Donald Trump, who said Washington would reduce reciprocal tariffs on Indian goods to 18% following a call with Prime Minister Narendra Modi.

The agreement reportedly includes India’s commitment to reduce purchases of Russian oil and increase imports from the United States and potentially Venezuela. Analysts said the easing of trade frictions has reduced uncertainty around India’s external accounts and improved the outlook for foreign investment.

“Reduced trade uncertainty following the India-US trade deal can attract foreign investment into Indian equities and debt and boost demand for the rupee,” market participants said, while cautioning that the RBI’s stance in the coming sessions would be closely watched.

Foreign inflows back in focus

According to analysts, the combination of the US–India trade deal, the EU–India trade agreement and a growth-oriented domestic budget “is expected to boost market sentiments and trigger immediate foreign capital inflows, potentially turning India’s balance of payments position.”

A report released on Tuesday said the trade deal “should help narrow the current account deficit, stabilise the rupee, and reduce India’s vulnerability to global shocks over time.”

Axis Securities described the agreement as “structurally positive for India’s medium-term growth and external stability,” noting that “improved market access and tariff certainty are likely to boost exports, support manufacturing investment, and strengthen inflows of foreign direct investment.”

The brokerage added that the deal is particularly positive for export-oriented sectors such as textiles, chemicals, pharmaceuticals, auto ancillaries, IT services and select industrials. “Over time, higher order inflows, better capacity utilisation and improved earnings visibility could support sustained growth and valuation re-rating for these sectors,” it said.

What expats should watch next

For UAE-based Indian expats, the immediate takeaway is timing. If the rupee extends gains toward the 90 or sub-90 levels, delaying remittances could result in lower rupee receipts for families back home.

Much will depend on how aggressively the RBI manages the currency. Traders remain alert to signs of intervention aimed at slowing appreciation to protect export competitiveness.

For now, momentum remains on the rupee’s side. As one report put it, the India–US trade deal “should be seen as a medium-term structural positive rather than a short-term trigger,” suggesting that the current strength may persist longer than many remitters initially expected.

- With inputs from Agencies