Indian rupee slides to 8-week low - should UAE NRIs wait to send money?

Dubai: The Indian rupee has dropped to an 8-week low to 23.46 against dirham (86.17 against dollar) over the escalation of Israel's attack on Iran's nuclear sites.

The INR was trading at 23.30 levels against one dirham in recent days, and the near 0.7% drop this morning offers Indian expats in the UAE with an opening to get better exchange rates if they are sending funds back home.

But the INR's drop comes with consequences for the Indian economy, especially what it has to be paying as oil imports.

Oil prices have gained 10% in the hours after Israel launched attacks on Iran.

"While the renewed Middle East tension is the immediate reason for INR sliding to 23.46 against dirham, the other main worry is about US tariffs," said Neelesh Gopalan, Treasury Manager at a Dubai-based remittance fintech. "India is yet to negotiate a tariff deal with the US - and Trump has just mentioned the July deadline again."

According to currency analysts, the Indian rupee will remain under sustained pressure. "Oil import costs will be what's most worrisome for the Indian economy to sustain its growth levels."

The lowest point for the INR against the dirham was in early February, at 23.9.

What next for INR?

"With the rupee already hovering around 86 to the dollar, any continuing geopolitical escalation will exacerbate currency pressures. A surge in crude oil prices beyond $80-$85 would widen India’s current account deficit and stoke inflation concerns.

"This may trigger further foreign portfolio outflows, pushing the INR toward levels of 87 to the dollar or more unless the RBI steps in with timely intervention.

"While India’s strong forex reserves offer some defence, prolonged uncertainty could limit monetary policy options and heighten volatility across currency and capital market

- Krishnan Ramachandran, CEO of Barjeel Geojit Financal Services