Page 125 - AAE PR REPORT - SEPTEMBER 2025

9/2/25, 9:49 AM Indian rupee hits all-time low, boosting UAE-India remittance activity by 15 percent
“This depreciation was driven by global geopolitical fluctuations, most notably the 50 percent tariffs
imposed by the United States on Indian exports, alongside the cautious monetary policies adopted by the
Reserve Bank of India and rising oil prices. Additionally, the global stability of the U.S. dollar – to
which the UAE dirham is pegged – further amplified the impact on exchange movements,” said the
exchange house.

This decline has directly influenced the volume of financial remittances from the UAE to India, with the
company recording a 15 percent increase in remittance value during the recent period, said Ali Al Najjar,
chief operating officer at Al Ansari Exchange.

This surge is attributed to the Indian community’s eagerness to take advantage of exchange rate
fluctuation and direct their savings to their families back home, especially in conjunction with the Onam
festival celebrations, when expatriates are keen to enhance financial support for their families during this
culturally significant occasion, he added.

Read: Silver hits 14-year high as Fed rate cut bets lift metal’s appeal

U.S. trade deal key to currency stability

Analysts cautioned that without progress in trade relations between India and the United States, stability
in the Indian rupee is unlikely, and the currency could face repeated tests of new lows. They added that
much now hinges on the Reserve Bank of India and how it chooses to manage market conditions.

The Reserve Bank of India has a history of intervening to contain sharp swings in the Indian rupee,
particularly during periods of heightened uncertainty or speculative pressure. Although the central bank
has consistently maintained that it does not seek to defend any specific exchange rate level, its
interventions are closely watched by markets and often play a decisive role in shaping short-term rupee
movements.

The United States raised tariffs on Indian goods by 25 percent last week, bringing the overall duty
burden on the country’s exports to 50 percent. The move is expected to erode India’s export
competitiveness, particularly in sectors such as textiles and engineering, where higher costs could weigh
on revenues and profitability. A slowdown in exports would also risk dampening hiring and curbing new
investment.

The tariff increase has heightened uncertainty around corporate earnings and India’s broader growth
outlook, prompting foreign portfolio investors to reassess their exposure to the market. Over the past
three sessions, foreign investors have withdrawn $2.4 billion from Indian equities.

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