Dubai, September 2, 2025 – The Indian rupee has slumped to an all-time low against the US dollar, sparking a surge in remittances from the UAE and across the Gulf. For millions of expatriates, the currency’s weakness has turned into an opportunity to maximize transfers back home, even as economists warn of turbulent times ahead for India’s economy.
Rupee Breaches 88 per Dollar Amid Tariff Shock
On Friday, the rupee plunged past the critical ₹88 mark, hitting 88.3075 per dollar in its steepest slide ever. The fall followed Washington’s decision to impose 50% tariffs on Indian exports, a move experts say will widen India’s trade deficit and dampen investor sentiment.
“Until the uncertainties around US tariffs settle down, it will continue being a rupee-negative event,” said Dipti Chitale, CEO at Mecklai Financial Services. Analysts believe the Reserve Bank of India (RBI) may step in to curb volatility but will likely allow gradual depreciation to support exporters.
Economic Outlook: Growth Meets Headwinds
India’s economy expanded 7.8% year-on-year in the April–June quarter, surpassing forecasts. But economists caution that growth may slow as tariffs disrupt supply chains.
“Our full-year GDP forecast for FY26 stands at 6.3%, but the bias is clearly downward unless trade tensions ease,” said Sakshi Gupta, principal economist at HDFC Bank.
Adding to the pressure, foreign investors are pulling out of equities, raising concerns about earnings risks in export-heavy sectors. “Everything now depends on how the RBI manages the markets,” said VRC Reddy, Treasury Head at Karur Vysya Bank.
Expats in UAE and GCC Drive Remittance Boom
While the rupee’s decline has rattled policymakers, it has boosted remittances from the Gulf, home to over nine million Indians.
Al Ansari Exchange reported a 15% jump in transfers to India as expatriates took advantage of favorable exchange rates. “The rupee’s depreciation has created a valuable opportunity for the Indian community in the UAE to maximise the value of their remittances,” said Ali Al Najjar, COO of Al Ansari Exchange.
The rupee now trades at 24.03 per dirham, making every dirham sent home stretch further. The surge is also being fueled by the Onam festival season, with families eager to send more money for household expenses, education, property, and loan repayments.
Record Remittances on the Horizon
India received a record $125 billion in remittances in 2024, with the GCC contributing the majority, according to the World Bank. Analysts believe that if the rupee stays under pressure, 2025 inflows could set a new record, cushioning the impact of tariffs and trade tensions.
Al Ansari has expanded capacity to handle the rush by extending branch hours, boosting liquidity, and offering transfer fee discounts to meet demand.
Challenges Ahead for the Rupee
Despite the remittance windfall, the rupee’s outlook remains fragile. Rising oil prices, a swelling import bill, and the dollar’s global strength from high US interest rates could push the currency to new lows.
“Unless there is a meaningful improvement in US-India trade relations, the rupee could test fresh lows frequently,” warned Reddy of Karur Vysya Bank.
For policymakers, the rupee’s weakness is a challenge. But for millions of Indian expatriates in the UAE and GCC, it is a timely financial blessing. The sharp rise in remittances underscores how currency movements directly impact families, consumption, and India’s broader economy.
