The Indian rupee has recently witnessed a sharp decline against the UAE dirham, which is pegged to the U.S. dollar. The rupee has approached record lows, trading around ₹23.91 per AED, with intra-week fluctuations between ₹23.63 and ₹23.95. This marks one of the weakest levels in recent years and has drawn significant attention from expatriate communities and businesses with exposure to India.
The Indian rupee also hit its weakest level ever against the dollar on Tuesday after U.S. President Donald Trump threatened to impose more tariffs against New Delhi over its purchase of Russian oil. The rupee rose as much as 0.5 percent to a record high of 88.102 rupees to the dollar earlier today.
Factors impacting the Indian rupee
The drop in the Indian rupee against the UAE dirham has been driven by several factors, including heightened trade tensions between the United States and India, particularly the threat of new tariffs on Indian exports of up to 25 percent. These developments have unsettled investors and triggered capital outflows from Indian markets.
July 2025 witnessed the rupee’s lowest monthly performance since 2022, with foreign equity sell-offs exceeding $2 billion, said Al Ansari Exchange.
Additionally, the Reserve Bank of India has taken a more cautious stance on currency intervention, allowing the rupee to adjust more freely to external factors. Global geopolitical concerns and rising oil prices have further weighed on India’s import bill, exacerbating the currency’s decline.
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UAE sees surge in remittance activity
For consumers in the UAE, this development is already influencing remittance and currency exchange patterns. Al Ansari Exchange has observed a surge in remittance activity, as Indian expatriates take advantage of the more favorable rates to send additional funds back home. The stronger conversion value is allowing customers to remit significantly higher amounts in rupees for the same dirham outlay, providing tangible benefits to families and dependents in India.
“The current exchange rate presents a unique opportunity for Indian expatriates in the UAE to maximise the value of their remittances. While the outlook for the rupee remains influenced by global and domestic factors, we are fully prepared to meet the increased demand,” said Rashed A. Al Ansari, CEO of Al Ansari Exchange.
At the same time, businesses and individuals engaged in trade with India are reviewing their hedging strategies and timing of transactions in light of the increased volatility.
Trump on Monday repeated his threat of imposing steep trade tariffs on India over its purchases of Russian oil, stating that he will be “substantially raising the tariff paid by India to the U.S.”
Trump’s comments came after he slapped India with 25 percent reciprocal tariffs last week, and warned that he could impose tariffs of as high as 100 percent on the biggest buyers of Russian oil, China and India.
