Rupee hits record low, UAE remitters get nearly Rs26 for Dh1

Dubai: The Indian rupee fell to a record low, giving UAE-based remitters one of the strongest exchange-rate windows yet, while higher oil prices and sustained foreign outflows added pressure on Asia’s third-largest economy. (Check live forex rates here)

At 8.30 am UAE time, Dh1 stood at Rs25.93, according to XE.com, while the rupee stood at 95.25 against the US dollar. The move gives Indian expatriates in the UAE more rupees for every dirham sent home, although the currency’s fall also points to wider strain from oil imports, weak capital flows and pressure on India’s balance of payments.

The rupee closed at 94.8450 per dollar on Wednesday, down 0.3% on the day, after drifting back toward record lows following the fading impact of earlier central bank support measures. Traders said dollar sales by state-run banks, likely on behalf of the Reserve Bank of India, helped limit deeper losses.

Remittance value rises for UAE expats

The rupee’s fall means UAE residents sending money to India now get close to Rs26 for every dirham, a level that could encourage more remittances from expats with school fees, family expenses, property payments or loan commitments back home.

A Dh1,000 transfer would fetch about Rs25,930 before exchange-house margins and fees, making the current rate attractive for Indian workers and families who track the dirham-rupee rate closely.

Exchange houses typically see stronger interest when the rupee hits fresh lows, especially from customers waiting to move savings or make larger one-off transfers. The benefit, however, comes with a weaker macro backdrop, since a falling currency can raise import costs and add pressure on consumer prices in India.

Oil prices add pressure

Brent crude rose more than 3% to nearly $115 per barrel, weighing on oil-sensitive Asian currencies including the Philippine peso and Indonesian rupiah, both of which also hit record lows on Wednesday.

The rise in crude has come while efforts to end the Iran conflict remain stalled. US President Donald Trump has instructed aides to prepare for an extended blockade of Iran, the Wall Street Journal reported late on Tuesday, citing US officials.

India is particularly exposed to higher energy prices because it depends heavily on imported oil. When crude prices rise, the country needs more dollars to pay for imports, which adds pressure on the rupee and widens the trade gap.

Analysts and traders expect the rupee to remain under strain while oil prices stay elevated, although a fall below 95 could draw stronger intervention from the Reserve Bank of India.

Capital flows weaken

India’s efforts to steady the rupee are expected to become harder in the coming months because weak capital inflows are now replacing speculative pressure as the bigger concern.

Economists have started widening their estimates for India’s balance of payments deficit, the broadest measure of money flowing in and out of the economy. Kotak Mahindra Bank expects the gap to reach $50 billion this fiscal year, compared with deficits of $39 billion and $5 billion in the previous two years. IDFC First Bank sees the deficit widening to between $40 billion and $50 billion from an estimated $35 billion in the prior period.

“The fundamental balance of payments picture continues to look weak, so the pressure on the rupee may persist,” Rahul Bajoria, head of India economics research at BofA Securities India told Bloomberg. “The RBI’s steps do provide relief, but we do not know if their efficacy will remain the same over a longer period.”

The rupee fell 0.3% to 95.1512 per dollar on Thursday, breaching its previous low of 95.1250 seen in late March. The currency has erased the gains made after the RBI moved to curb speculation, while the 10-year bond yield rose seven basis points to 7.06%.

RBI faces tougher choices

The oil shock has coincided with global funds selling Indian stocks, with investors citing high valuations and limited artificial intelligence-linked opportunities. Foreign investors pulled nearly $20 billion from Indian equities in the first four months of 2026, exceeding last year’s full-year record outflow.

India’s foreign exchange reserves stand at $703 billion, but a negative $78 billion forward book, which reflects future dollar obligations, limits the central bank’s room to keep defending the currency through dollar sales.

Most analysts expect the rupee to stay on a weaker path. BofA has lowered its rupee forecast to 94 per dollar by mid-year from 89 earlier, while IDFC First Bank expects the currency to trade in the 95 to 96 range despite RBI support. Barclays has a year-end forecast of 96.80.

Goldman Sachs this week raised its oil-price forecast because of the prolonged closure of the Strait of Hormuz, with Brent now expected to average $90 a barrel in the fourth quarter, compared with an earlier forecast of $80.

- With inputs from Bloomberg.