The Indian rupee’s steady decline is pushing the UAE dirham closer to the psychologically important Rs25 mark, raising expectations of stronger remittance inflows from the Gulf and offering expatriate workers a timely exchange-rate advantage.
With the Reserve Bank of India (RBI) indicating it will not defend any specific currency level, markets increasingly expect further pressure on the rupee in the months ahead. At present, the rupee is trading near 90.87 to the US dollar, placing the dirham — pegged at about 3.6725 to the dollar — between Rs24.70 and Rs24.75. Analysts say a move to Rs92 per dollar would lift the dirham beyond Rs25 for the first time.
Such a shift would immediately raise the rupee value of remittances sent by UAE and GCC-based workers, strengthening household finances across India.
RBI Governor Sanjay Malhotra said the central bank does not target any particular rupee level, including symbolic thresholds such as 90 or 91. Speaking to NDTV Profit, he said India’s exchange-rate policy remains market-driven, with intervention limited to preventing excessive volatility. “On the whole, on the external front, we are very comfortable,” Malhotra said, citing strong growth, moderate inflation, foreign exchange reserves near $690 billion and a manageable current account deficit.
The rupee closed recently at 90.8650 per dollar, down 0.6 per cent on the day and close to its record low of 91.0750 set in December. Traders attributed the fall to strong importer demand for dollars and the unwinding of offshore non-deliverable forward positions. Intermittent dollar sales by state-run banks helped slow the decline.
Market participants view the RBI’s approach as acceptance of a weaker currency provided volatility remains contained. Analysts point to global dollar movements, foreign investor outflows and widening external gaps as key drivers. Forecasts now suggest the rupee could test Rs92 by March 2026, though brief recoveries remain possible if global trade conditions improve.
For Gulf expatriates, the implications are immediate. A shift from Rs24.7 to Rs25 per dirham would generate thousands of additional rupees annually for many families, easing pressure from rising education, housing and healthcare costs.
Malhotra noted that over the long term the rupee has depreciated by about 3 per cent a year, reflecting India’s higher inflation compared with advanced economies. This year, the currency has already weakened about 5 per cent, following a 2.5 per cent decline last year.
In 2025, the rupee recorded its largest annual fall in three years, closing at 89.87 after dropping 4.72 per cent. Economist Gaura Sen Gupta of IDFC First Bank said capital outflows played a central role, though a possible US trade agreement could offer temporary relief.
Traders said domestic and regional factors are now shaping the rupee’s direction more than global dollar trends, keeping the Rs25-per-dirham milestone firmly in focus for remitters.
