Indian rupee to drop more—boosting NRI remittances this year

Dubai: Indian expats across the UAE who jumped on the strong remittance window in early August—when the rupee briefly touched 23.82 to the dirham—may have acted just in time.

But the good news for those who missed it: the rupee may remain weak through the rest of 2025. (Check the latest forex rates here.)

In fact, according to forecasts from Deutsche Bank, Barclays, and MUFG, the Indian rupee is expected to remain one of Asia’s worst-performing currencies in H2 2025, driven by U.S. trade tensions, falling capital inflows, and economic growth concerns.

The trigger? A potential 25% tariff on Indian exports, announced by US President Donald Trump amid stalled trade talks, is amplifying the pressure on India's already vulnerable currency.

India is the only major Asian economy not to secure a trade deal with the US, a factor that’s widening its underperformance relative to peers like the yuan, ringgit, and rupiah.

Analysts estimate the tariff threat could shave 30 basis points off India’s GDP this year, adding to the rupee's downward bias.

India’s central bank, the RBI, meets this week (August 6), but its ability to support the rupee remains constrained. Despite holding near-record foreign exchange reserves, the RBI is expected to intervene only selectively to avoid burning through reserves or disrupting inflation control targets.

Adding to the drag are equity outflows, with Indian markets already seeing $11 billion in capital flight and little expectation of bond market inflows. “The rupee is likely to remain an underperformer in Asia,” said Dhiraj Nim of ANZ Bank.

For NRIs in the UAE, especially those earning in dirhams, this prolonged weakness in the rupee is creating an extended remittance window.

After hitting one of the best exchange rates of 2025 last week, many NRIs made their monthly transfers for August early, locking in higher rupee value for every dirham sent. With the rupee now hovering around 23.75 to 23.90 to the dirham, further depreciation could allow for even better exchange rates through Q4, especially if a trade deal fails to materialize.

But this trend is not without risks. “The key for markets and our rupee forecast is whether a trade deal is delayed but not denied,” said Michael Wan of MUFG Bank, revising his end-December rupee forecast to 87 per US dollar, down from 84.50 earlier.

If you’re an NRI in the UAE with financial obligations or investments in India, this could be a favourable period to remit larger sums, especially for property EMIs, education payments, or equity investments. With capital outflows rising and trade uncertainties unresolved, the rupee’s weakness may persist through year-end.

Even if the dollar stabilises, structural headwinds—from rate cuts to slowing growth—are expected to weigh on the rupee, making the case for continued remittance momentum from the Gulf.

- with inputs from Bloomberg