The ongoing depreciation of the Indian rupee has become a focal point of concern for financial experts, as external pressures like subdued foreign portfolio inflows and global trade uncertainties continue to weigh heavily on the currency. Hasan Fardan Al Fardan, CEO of Al Fardan Exchange, pinpointed several significant factors contributing to this trend. He remarked that the recent increase in the Reserve Bank of India’s (RBI) intervention band from $88.80 to $89.50 led to a swift decline in the rupee’s value.
This adjustment by the RBI indicates a more flexible stance on currency movements while still maintaining an ability to intervene during periods of market instability. Al Fardan emphasized that the central bank has actively engaged in dollar sales to mitigate volatility, highlighting its commitment to maintaining market stability.
Most foreign exchange strategists anticipate that the USD/INR pairing will fluctuate within a range of 88.9 to 89.8 in the short term. They note that the likelihood of a robust recovery for the rupee remains limited unless there is progress in US-India trade negotiations or a clearer perspective on potential US interest rate cuts. As such, the current risk profile leans toward prolonged weakness in the rupee, rather than an immediate rebound.
In stark contrast, Indian expatriates in the UAE are experiencing a more favorable scenario. The peg of the UAE dirham to the US dollar means that the rupee’s depreciation against the greenback results in stronger AED–INR exchange rates. As of late November, the dirham traded at approximately ₹24.35 to ₹24.4, representing a significant climb over the year and providing a golden opportunity for remitters.
This situation aligns with an uptick in remittance flows into India, which the World Bank estimates will reach around $129 billion in 2024, making India the world’s top recipient of remittances. This figure accounts for nearly 14% of global remittance flows. Projections from both the UN and the World Bank suggest continued growth for South Asia, supported by sustained labor demand in high-income regions like the Gulf.
Fardan remarked on the real-world implications of this macroeconomic environment. Indian expatriates are now able to send more rupees home per dirham, making it advantageous for those supporting education or home loans back in India. He pointed out that now is an ideal time for many to remit, as the favorable exchange rates have prompted individuals to expedite payments for various obligations.
For Indians residing in the UAE, the focus has shifted from the rupee’s weakness to strategizing the optimal way to leverage it. Many have begun pulling forward payments to benefit from the favorable AED–INR rates, especially for essential expenses. Fardan noted that 2025 presents one of the most advantageous settings for expatriates.
While some may be tempted to wait for peak rates, experienced remitters understand the elusive nature of perfect timing. Instead, many adopt a staggered remittance approach, securing part of their funds now while gradually distributing the rest to mitigate some of the inherent volatility in currency markets.
As remittances rise, the importance of utilizing regulated digital channels also becomes paramount. Fardan underscored the advantages of licensed providers, emphasizing the need to comply with regulations while ensuring the security of funds. He encouraged remitters to utilize available tools such as rate alerts and scheduled transfers to maintain better oversight over their transactions. Ultimately, for those sending money home, the primary concern should not solely be about securing favorable rates but also about providing consistent support to loved ones in India with peace of mind.
