Indian expats in UAE rush to send money home as rupee weakens to historic low

The rupee’s fall to a record low against the UAE dirham has triggered a surge in remittances from Indian expatriates in the Gulf, even as economists flag risks of higher inflation and widening external deficits.

The currency slipped to 96.88 per US dollar on Tuesday, pushing the UAE dirham to an all-time high of Rs 26.29. The move has created one of the most favourable remittance windows in years for Indians in the UAE.

For expatriates, the weaker rupee means higher value for every dirham earned abroad. A Dh5,000 transfer now fetches more than Rs 1.31 lakh, significantly higher than earlier this year. Exchange houses across the UAE have reported higher transaction volumes as workers and professionals accelerate remittances for household support, education, loan repayments and investments in India.

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Many expatriates are also increasing transfers into Indian fixed deposits, real estate and equity markets to lock in favourable exchange rates before further depreciation. Currency dealers say such spikes are typical whenever the rupee weakens sharply.

The rupee has now depreciated around 6–7 per cent against the US dollar in 2026, sliding from near 89 at the start of the year to above 96. The decline has intensified amid geopolitical tensions in West Asia that have pushed global crude oil prices higher.

India imports more than 80 per cent of its crude oil, making it highly vulnerable to energy price shocks. Higher oil prices widen the import bill, increase dollar demand and strain the current account deficit.

Analysts also point to persistent foreign portfolio outflows and strong global dollar demand as key pressure points. Institutional investors have pulled out Rs 2.65 lakh crore from Indian equities in 2026, nearly matching last year’s total outflows.

According to Bank of America Securities, India’s current account deficit could widen beyond 2 per cent of GDP this fiscal year — the highest since 2012–13.

The Reserve Bank of India has intervened through dollar sales via state-run banks to curb volatility, but traders say the moves have only smoothed fluctuations rather than reversing the trend.

Prime Minister Narendra Modi has also urged reduced dependence on dollar-intensive imports, including lower gold purchases and overseas travel.

Despite intervention, analysts expect continued pressure on the rupee due to elevated crude prices, strong US bond yields and capital outflows. Kedia Advisory expects a range of 91.70–99.50 against the dollar over the next six months.

Former UN advisor Santosh Mehrotra warned the rupee could “very easily” approach Rs 100 per dollar if current pressures persist, adding that the recent slide will have inflationary consequences.

While weaker levels have boosted remittances, economists warn that higher import costs for oil and other goods could feed into domestic inflation, leaving India with a dual outcome — stronger inflows from abroad, but rising macroeconomic stress at home.