Indian Rupee Slips Toward Rs25 per Dirham, Boosting Remittance Value for Gulf Expats
Dubai 18-01-2026 : The Indian rupee’s continued softness is bringing the UAE dirham closer to the key Rs25 level, a move that could significantly benefit millions of Indian expatriates working across the Gulf. As the rupee weakens, overseas earners sending money home stand to receive more rupees for every dirham remitted—offering timely relief amid rising household costs in India.
Market sentiment suggests the downward pressure on the rupee may persist. The Reserve Bank of India (RBI) has reiterated that it does not defend any specific exchange-rate level and intervenes only to smooth excessive volatility. This stance has encouraged traders to price in the possibility of further depreciation in the near term.
Dirham Nears a Historic Threshold
At present, with the rupee trading around 90.87 to the US dollar, the dirham—pegged at about 3.6725 to the dollar—is hovering between Rs24.70 and Rs24.75. If the rupee slides to Rs92 per dollar, as some forecasts indicate, the dirham would cross Rs25 for the first time, delivering a direct uplift to the rupee value of remittances from the UAE and wider GCC.
RBI Signals Market-Driven Policy
RBI Governor Sanjay Malhotra said the central bank does not target psychologically important currency levels and allows the market to determine the rupee’s value. Speaking to NDTV Profit, he emphasized that the RBI’s priority is financial stability and orderly market conditions, not defending fixed exchange-rate thresholds.
The rupee recently closed near 90.87 per dollar, marking its sharpest single-day fall in months and edging closer to record lows seen in late 2025. Traders attributed the decline to strong importer demand for dollars and unwinding of offshore positions, partially offset by intermittent dollar sales from state-run banks.
Why Expats Stand to Gain
For Gulf-based workers, the implications are straightforward. Because GCC currencies such as the UAE dirham and Saudi riyal are linked to the dollar, each incremental fall in the rupee magnifies remittance value. A shift from Rs24.7 to Rs25 per dirham could translate into thousands of extra rupees annually for families in India—helping cover education, housing, and healthcare expenses.
Outlook: More Volatility Ahead
Analysts note that the rupee remains under pressure from global dollar movements, foreign investor outflows, and external imbalances. Some forecasts see the currency testing Rs92 per dollar by March 2026, though short-term rebounds are possible if global trade conditions improve.
Economist Gaura Sen Gupta of IDFC First Bank said the rupee’s recent weakness reflects capital-flow dynamics and a more flexible policy approach by the RBI. While a potential US trade deal could offer temporary relief, underlying pressures may keep the rupee on a softer trajectory.
The Bigger Picture
Over the long term, the RBI notes that the rupee has depreciated by about 3% annually on average, a trend seen as natural given India’s higher inflation relative to advanced economies. In 2025, the currency recorded its steepest annual fall in three years, underscoring deeper structural and capital-flow challenges.
For now, markets appear convinced that the path of least resistance remains downward—keeping the Rs25-per-dirham milestone firmly in sight and offering Gulf-based remitters a welcome exchange-rate windfall.