Massive Spike In Remittances By Gulf-based NRIs As Rupee Nosedives To Record Levels

The Indian currency, which was trading at 86.80 a piece against the greenback in the morning hours on Thursday, February 13, is predicted to cross 90 soon – a level which was unbelievable hitherto.

The Dollar Index – a measure of the value of the US dollar relative to a basket of foreign currencies – on the other hand, was at over 108 on Thursday morning hours.

The free fall in the rupee is expected to trigger a further surge in non-resident Indian (NRI) remittances, especially from the Gulf region which has a sizeable population of relatively low-earning Indian expats who regularly send money to India to support families back home.

The UAE has the highest chunk of Indian expats working across sectors – from unskilled working in construction and similar fields to highly-skilled IT and financial professionals.

“The Indian rupee is likely to weaken further, possibly testing the 90.40 mark in the coming weeks,” Ajay Kedia, a market expert and Managing Director of Mumbai-based Kedia Commtrade and Research, told Arabian Business.

“The strengthening of the Dollar Index beyond 108 due to global currency pressures fuelled by [Donald] Trump’s tariff war and rising crude oil prices, exacerbated by sanctions on Iran and Russia, are expected to strain India’s import bill, adding to the rupee’ woes,” he said.

Manoj Kumar Jain, Director – Head Commodity and Currency Research at Prithvi Finmart Private Limited, said the rupee is also struggling due to a two-way sword – on one side US tariff fears and on the other side the foreign portfolio investors’ (FPI’s) continuous selling of Indian equities.

Milind Singh, Co-founder and CEO of Xare, a Dubai-based fintech operating in remittances and ‘shared spending’ segments, said there is a spike in remittances from low-income segments of NRIs.

“They are keen to take advantage of the lower rates, especially running up to Ramadan, which we know is one of the highest spending periods for many communities globally,” Singh told Arabian Business.

NRIs can earn more money for each buck remitted if rupee rates keep falling.

Further fall in rupee inevitable if global headwinds persist

Forex market experts said further depreciation of the Indian currency toward the 90 and beyond level seems inevitable if global headwinds persist.

The large-scale selling of equities by Foreign Institutional Investors (FIIs) and FPIs and other global factors keeping equity markets in India under pressure will also add to the rupee’s further slide, they said.

The slowing trend expected in the Indian economy, with the country’s GDP (gross domestic product) forecast to expand by 6.4 per cent through March, much lower than the 7 plus rate earlier, is another factor impacting the rupee’s weakness.

Jain said in the backdrop of changing fundamentals like trade tariff fears and geopolitical tensions, the rupee will continue to show pressure in the coming months.

The Indian foreign exchange reserves are also hitting multi-month lows due to FPI selling pressure and RBI open market operations of buying government securities, which is adding to the rupee’s woes, he said.

“Net-net, rupee looks weak in the first half of 2025, but could show some recovery in the second half, and a full year range is seen between 85.00-90.00 per US dollar,” Jain told Arabian Business.

Kedia, said though despite the headwinds, the rupee could see a slight recovery in the short run as the RBI intervention, the US dollar selling by Indian exporters and profit-booking by speculators could act as a support to the local currency.

Jain also said in the very short-term, some recovery in rupee value can be expected due to profit taking in the dollar index from the current higher levels.

Spike in remittances due to money exchange houses promoting low rates

Despite the current spike in NRI remittances from the Gulf region, sector experts said the increased remittances will be limited to the low-earning section of Indian expats as a large section of NRIs in the region, mostly the affluent one take a different view on the sliding rupee.

The Xare chief executive said the Indian rupee rates have been trending downward for a while now, and it is not seen any more as a dip, but a trend which will continue. So, why rush to send now if later will likely be better,” he said.

Besides, the average Indian demographic is also changing, and more white-collar professionals are moving to the UAE and other countries in the region, Singh said.

“Their perception about the ongoing weakness of the rupee is different as they think why send money to India, and why not have it in dollars,” he said.

Singh said the current spikes in NRI remittances from the Gulf region were mainly driven by exchange houses promoting lower rates.

“With exchange houses fast losing ground with the emergence of hi-tech, low-cost remittances offered by fintechs, the trend may see significant changes going forward,” he said.