Rupee slides to 25.57 vs UAE dirham, pressure builds on remittances

Dubai: The Indian rupee slipped further against the UAE dirham on Wednesday morning, adding to a steady stretch of weakness that is beginning to reshape remittance value for UAE residents.

At around 9:12 am, Dh1 was valued at 25.57, marking the weakest level in recent sessions. Against the US dollar, the rupee was trading near 93.93, reflecting continued pressure from global currency moves and oil-linked concerns.

The latest move pushes the rupee to the upper end of its recent trading band, signalling that volatility is building even if daily swings remain measured.

Over the past week, the dirham to rupee rate has ranged between 25.12 and 25.57, with an average of 25.39 and modest volatility of 0.48%. The 30-day trend shows a clearer directional shift, with the pair moving from as low as 24.70 to current highs, averaging 25.07.

A similar pattern is visible in dollar terms. The rupee has traded between 92.25 and 93.91 over the last seven days, pointing to persistent pressure across global currency markets.

The steady climb toward weaker levels suggests that external factors, rather than domestic triggers alone, are driving the move.

Rising energy prices are emerging as a central factor behind the rupee’s slide, with India’s heavy reliance on imported crude leaving the currency exposed to global shocks.

A recent Emkay Research report flagged that the Reserve Bank of India faces a complex policy environment, with competing priorities around inflation, growth and currency stability.

“RBI's battle unlikely to be easy, FX and rates trade-offs,” the report said, highlighting the difficulty of responding to a supply-driven shock.

While direct fuel price pass-through remains partly managed, indirect effects are building through inflation expectations and financial conditions. That is beginning to feed into currency markets.

Policy choices are becoming more constrained. Supporting growth requires accommodative conditions, yet currency weakness and inflation risks may demand tighter control.

The report noted that the bar for a conventional rate hike remains high, given the nature of the shock. At the same time, liquidity conditions and foreign exchange interventions are playing a larger role in stabilising markets.

The central bank has continued to intervene, particularly through forward markets, to limit volatility. These actions have helped prevent sharper swings but have also delayed broader liquidity tightening.

Bond market support has kept yields contained, adding another layer to the policy balancing act.

A weaker rupee improves the value of remittances for UAE-based Indians, in the short term, allowing transfers to stretch further when converted into rupees.

At the same time, sustained weakness can signal broader economic pressures, including higher import costs and rising inflation in India. That may eventually affect household expenses back home.

The direction from here will depend heavily on oil price movements and how the RBI navigates its policy trade-offs. With crude markets still volatile and geopolitical risks unresolved, currency swings are likely to remain in focus for the weeks ahead.

- With inputs from agencies.