Is Indian rupee crashing? Big drops against UAE dirham spark remittance surge again

Dubai: The Indian rupee’s steep drop to 24.49 against the UAE dirham on Wednesday has opened one of the strongest payout windows in years for UAE-based Indian expats, be it workers, students or business owners looking to send money home.

India’s currency slid to a new historic low on Wednesday, crossing the key 90-per-dollar level mark and trading at 90.16. It hit 89.5 just 10 days ago, after months of pressure from US tariffs, foreign investor exits and tighter global liquidity.

For residents earning in dirhams — pegged to the US dollar — the shift has produced an unusually favourable exchange rate that many households say they hadn’t seen coming this year. Remittances routed through UAE exchanges now convert into materially more rupees, prompting a wave of early transfers as families move to capitalise before conditions change.

In a new session marked by foreign fund outflows, traders pointed to firm crude oil prices and uncertainty surrounding the India–US trade deal as key pressures on the exchange rate. The rupee’s slide places it among Asia’s weakest performers this year. Estimates show a 4–5% drop in 2025, drawing attention from investors tracking regional currency trends and their trade implications.

India’s central bank, the RBI, has sold more than $30 billion in reserves since July in intermittent attempts to slow the slide — but the November drop signalled a moment where officials chose not to intervene.

The RBI maintains that it acts only to curb volatility, not defend a specific rate. Its new governor, appointed in December 2024, has taken a more hands-off approach than his predecessors.

The IMF added new clarity late November, classifying India’s exchange-rate regime as a “crawl-like arrangement”, suggesting the currency is allowed to adjust gradually in line with inflation differentials.

Even so, the central bank has stepped in when moves have threatened to disrupt markets — including mid-October, when it pushed back as the rupee approached 89 per dollar.

Market analysts flagged ripple effects across sectors. Export-dependent industries stand to gain from the weaker currency. Shrimp processors, textile producers, IT services firms, pharmaceutical exporters, engineering companies, metal manufacturers, and auto suppliers could see improved competitiveness as overseas revenues rise in rupee terms.

At the same time, companies reliant on imports face higher input costs. FMCG producers, plastic polymer users, and the oil and gas sector may feel pressure as their dollar-denominated expenses increase.

Government officials sought to ease concerns around the rupee’s decline. Commerce and Industry Minister Piyush Goyal fielded questions on the currency’s depreciation, reiterating that broader economic indicators remain solid. He noted strong foreign exchange reserves, capital inflows, and steady consumer spending.

Chief Economic Advisor V. Anantha Nageswaran also downplayed the market reaction to the breach of 90. He said the rupee’s movement remains within manageable limits and has not triggered macroeconomic stress. He added that the current depreciation has not fueled inflation or weakened export momentum.

Nageswaran summed up his stance bluntly: “I am not losing my sleep over it.”