The Indian rupee’s plunge beyond 90 to the dollar and its slide past 24.50 against the dirham — levels that currency traders describe as “structurally significant” — has opened one of the most favourable remittance windows for non-resident Indians in years.
With forecasts pointing to further weakness extending into 2026, analysts say the current phase marks a rare alignment of macroeconomic stress in India and supportive global conditions that amplify remittance gains for millions of NRIs in the Gulf.
The rupee, down about 5 per cent year-to-date, is now the worst-performing Asian currency and is heading for its sharpest annual decline since 2022. Its fall has been fuelled by widening fiscal and trade deficits, persistent foreign investor outflows, weaker foreign direct investment, soft external commercial borrowings and a deceleration in nominal GDP growth.
These pressures have converged to deepen the currency’s vulnerability across global markets.
“Until there is clarity on trade negotiations and a stabilisation in capital flows, this is the adjustment the rupee has to undergo,” said Dhiraj Nim, FX strategist at ANZ. He expects the currency to weaken further to 91.30 against the dollar by the end of next year, warning that the move could materialise sooner if foreign outflows intensify.
Foreign investors have already withdrawn about $17 billion from Indian equities this year, with FIIs selling Rs48.14 billion in the first two sessions of December alone — extending a five-month selling streak. Net capital inflows in the third quarter shrank to just $0.6 billion from $8 billion in the previous quarter. At the same time, India’s trade deficit surged past the $40-billion mark in October, worsening the shortage of dollars and dirhams in the domestic forex market.
“The weak macro picture in India makes weaker currency performance almost inevitable,” said portfolio manager. “Multiple indicators are flashing red — rising trade deficits, slowing nominal GDP, weak FDI and sustained foreign selling.”
Despite the rapid depreciation, the Reserve Bank of India has avoided mounting a full-fledged defence of the rupee. Instead, the central bank has intervened through short, tactical bursts of dollar supply, a move that bankers interpret as an effort to prevent disorderly volatility without resisting the market-driven adjustment. “It is essential for the RBI to keep speculators from becoming too comfortable with a one-way bet,” said Anindya Banerjee, head of commodity and currency at Kotak Securities. “But the pattern clearly shows that the RBI is allowing the rupee to realign with fundamentals.”
The slide has continued even as the dollar index hovers near 99.20, weighed down by expectations that White House economic adviser Kevin Hassett could be named the next US Federal Reserve chair — a development that has triggered questions around the Fed’s independence. Despite the dollar’s relative softness, the rupee has been unable to benefit, underscoring the strength of domestic pressures.
Markets are now watching the RBI’s upcoming policy announcement, with expectations of a 25-basis-point rate cut to 5.25 per cent. While inflation remains comfortably within the central bank’s 2-6 per cent band, a rate cut could exert additional short-term pressure on the rupee.
Remittance windfall
For NRIs, especially in the UAE, the currency’s slide has translated into a remittance windfall. The rupee’s fall past 24.5 per dirham — and its continued drift toward 25 — has driven a surge in remittance activity. Exchange houses in Dubai and Abu Dhabi report a 15–20 per cent jump in volumes this week, with many clients pre-booking rates.
“We are seeing NRIs locking in aggressively, particularly for year-end financial commitments and property purchases back home,” said a treasury manager at a leading UAE exchange firm. “A lot of customers expect the rupee to slip further before stabilising, and they are remitting in tranches to capture the dips.”
Analysts warn that depreciation pressures may persist for the next two quarters unless India sees a sudden improvement in capital inflows or trade dynamics. Nim notes that currency volatility could remain elevated until global risk appetite improves and geopolitical uncertainty eases.
“For policymakers, the challenge will be managing volatility without impeding the rupee’s fundamental adjustment path. But for NRIs, the rupee’s slide to historic lows represents a welcome windfall — one that could stay attractive well into 2026,” says a spokesman at a money exchange firm.
