The US dollar weakened against most major and emerging market currencies, including the Indian rupee, after a landmark US Supreme Court ruling struck down sweeping emergency tariffs imposed by President Donald Trump, triggering fresh uncertainty over US trade policy and growth prospects and reshaping currency dynamics for global investors and expatriates.
The Indian rupee strengthened by nearly 20 paise to trade around 90.76 against the dollar in early Asian trade on Monday, recovering from Friday’s close of 90.98, as the greenback slipped broadly in global markets. The dollar index, which measures the currency against six major peers, fell about 0.35 per cent to near 97.45, reflecting a wider loss of momentum for the US currency.
Because the UAE dirham is pegged to the US dollar, any weakness in the greenback directly affects the dirham’s exchange rate against the rupee. As the rupee strengthened, the dirham eased slightly against the Indian currency, reducing the value of remittances sent by non-resident Indians (NRIs) from the Gulf to India.
Currency exchange houses in the UAE said the rupee’s appreciation has already narrowed remittance gains for Indian expatriates. The dirham was trading close to 24.70–24.80 against the rupee in early Monday deals, compared with levels above 25 in recent weeks when the rupee had weakened. Even small movements in the rupee can significantly affect remittance volumes given the scale of monthly transfers from the Gulf to India.
For NRIs in the Gulf, the rupee’s rebound presents a mixed picture. While a stronger rupee signals improving sentiment toward India’s economy, it reduces the rupee value of remittances sent from dirham-linked incomes. Exchange houses said remittance volumes often dip when the rupee strengthens sharply and pick up when the currency weakens beyond key psychological levels.
“The rupee opened stronger after the US Supreme Court’s decision on tariffs caused the dollar index to fall,” said Anil Kumar Bhansali, treasury head and executive director at Finrex Treasury Advisors. “Most Asian currencies have gained from their previous close as the dollar weakens across the board.”
Sajith Kumar PK, group CEO of IBMC International, cautioned that underlying demand for dollars remains strong in the domestic market, particularly from importers and corporates, which could limit sustained gains in the rupee. “The rupee could face intermittent pressure during the day as dollar-buying interest continues,” he noted.
Madhavi Arora, lead economist at Emkay Global Financial Services, said the rupee’s near-term path will depend on global risk appetite and US rate expectations. “If US data continues to soften and the Federal Reserve turns more dovish, the dollar could remain under pressure, allowing the rupee to appreciate toward the 90.30–90.50 range,” she said. “But any rebound in crude oil prices or renewed foreign fund outflows could quickly reverse those gains.”
Strategists at MUFG Bank said policy uncertainty in the US may cap dollar strength in the short term. “The dollar’s safe-haven appeal tends to fade when US-specific risks dominate the narrative. For USD/INR, we see scope for consolidation with a mild downside bias if global risk sentiment remains stable,” the bank said, while warning that emerging market currencies remain vulnerable to sharp swings in capital flows.
The Supreme Court ruling declared that the earlier tariff framework exceeded presidential authority under the International Emergency Economic Powers Act, effectively scrapping a major pillar of Washington’s trade strategy. In response, Trump criticised the verdict and announced a new blanket tariff of 15 per cent on all trading partners, a move that has further unsettled markets and clouded the US trade outlook.
Analysts say the policy shifts have dented confidence in US economic direction and reduced safe-haven demand for the dollar in the near term. Recent US data has also failed to support the currency. Official figures showed the US economy grew at an annualised pace of just 1.4 per cent in the fourth quarter, below earlier estimates of around 3 per cent, while the S&P Global composite purchasing managers’ index slipped to 52.3 in February from 53.0 in January, signalling moderation in business activity.
These developments have reinforced expectations that the Federal Reserve may adopt a more cautious stance on interest rates in the coming months, limiting dollar strength and keeping emerging market currencies supported.
For India, the softer dollar and shifting US trade dynamics could offer a modest competitive advantage for exporters. However, the rupee’s trajectory will continue to depend on foreign investment flows and domestic fundamentals. Foreign institutional investors have remained net sellers in Indian equities this month, offloading shares worth more than Rs.20 billion so far, which could cap sustained appreciation in the rupee.
Currency strategists expect volatility to persist in the near term as global markets digest shifting US policy signals, economic data and capital flows. Until clearer direction emerges, both the rupee and the dirham are likely to remain sensitive to dollar movements, keeping expatriates and investors closely watching currency trends.
