Indian Rupee Weakens Against Dirham: Why UAE Expats Not Rushing To Remit

The Indian rupee's steep fall against the dirham has stirred mixed emotions among expatriates in the UAE.

While families back home gain more rupees per dirham sent, remitters themselves are showing new restraint - a sharp contrast to earlier phases of rupee weakness that saw money transfer counters across the UAE overflowing with customers.

The rupee ended last week at around Rs88.72 against the dollar, its weakest level in a month, after briefly touching a record intraday low of Rs88.80. The currency dropped about 0.7 per cent for the week amid concerns over higher US visa fees, fresh tariff uncertainties, and continuing capital outflows. Despite the Reserve Bank of India's attempts to contain volatility, firmer US bond yields and capital market stress capped the rupee's ability to rebound.

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Against the dirham, the rupee's slide has been equally sharp. One dirham now fetches about Rs24.18, compared with roughly Rs23.40 at the start of the year - a depreciation of nearly 3.5 per cent. The rupee's value against the dirham has thus weakened from Dh0.0436 to about Dh0.0413, marking one of its steepest year-to-date declines in recent years.

“Each time the rupee dips, families in India get more for every dirham sent. But this time, remitters are waiting for stability,” said Sajith Kumar P.K., group CEO & managing director at IBMC Financial Professionals Group.“Expats have become wiser after months of steady decline. They are splitting their transfers instead of rushing in bulk.”

During previous bouts of rupee weakness - notably in 2018 and 2022 - expatriates sent large sums home to capitalise on favourable exchange rates. But this year's consistent and predictable fall has altered behaviour. Forex dealers in Dubai and Abu Dhabi say remittance volumes have remained steady, without the usual spike that accompanies a sudden slide.

"Remitters are behaving more strategically,” said K V Shamsudheen, director of Barjeel Geogit Securities.“Because the rupee has been slipping almost every month, the sentiment is that there's no need to hurry - the rate might go further down. That's why we're seeing stability, not panic.”

India received a record $125 billion in remittances in 2024, with the GCC accounting for nearly half. Analysts expect inflows to remain strong this year, though not dramatically higher, as Indian workers and professionals in the Gulf appear to have factored in a weaker rupee as the“new normal.”

The rupee's extended slide has put the Reserve Bank of India in a tight spot. Intervening too heavily could erode foreign exchange reserves, while letting the rupee drift risks pushing up imported inflation. Most economists expect the central bank to continue a policy of“controlled depreciation” while smoothing volatility through selective dollar sales.

Despite short-term anxiety among remitters, the weaker rupee remains a silver lining for India's current account. It boosts remittance inflows in rupee terms and makes Indian exports more competitive. Still, the lack of a remittance rush from the Gulf this time underscores how much financial discipline the Indian diaspora has gained - a reflection of experience as much as prudence.

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