Indians residing in the UAE hastily transferring funds to their homeland due to the Indian rupee approaching historic devaluation levels
In the financial landscape of 2025, the Indian rupee (INR) has experienced a significant depreciation against the UAE dirham (AED). This depreciation, which has brought the INR close to record lows against the AED, has had a notable impact on remittances sent from UAE-based Indian expatriates to their homeland.
For many Indian expatriates, this depreciation translates into a lower value for every dirham sent home. With the INR weakening from about 0.0436 AED to around 0.0419 AED per rupee, 1 AED has risen in value to about 23.8-23.9 INR on average, up around 2.5% during 2025. This means that for the same amount of dirhams sent, recipients in India now receive several hundred rupees less than they did earlier in the year.
This depreciation negatively impacts the purchasing power of Indian expatriates in the UAE, particularly households that are heavily dependent on remittances. The lower value of the rupee received by their families can create financial strain and put pressure on their income value.
The remittance industry has also felt the effects of the INR's depreciation. While it may reduce the amount of rupees received per remittance transaction, potentially lowering the total value of remittances in INR terms, it might also motivate expatriates to send more remittances to compensate for the lower rupee value. This results in a fluctuation in the cost-effectiveness and exchange margin business for remittance service providers, depending on market volatility and competitive rates.
Despite these challenges, the remittance flow from the UAE to India has remained robust, supported by a robust labour market, higher oil prices, and stable employment. Digital platforms have also grown rapidly in the UAE's remittance industry, capturing a growing share of transactions with instant transfers and rate alerts.
The Reserve Bank of India (RBI) faces a balancing act, intervening enough to curb excessive volatility while preserving foreign exchange reserves and allowing the currency to adjust to market conditions. The RBI has opted for a measured approach, allowing the currency to adjust to external shocks.
Notably, Al Ansari Exchange, one of the UAE's largest remittance networks, has reported a marked increase in digital remittances during the latest rupee slide. This trend is expected to continue, providing an additional lift in remittances in the second half of 2025.
The weaker rupee, while benefiting expatriates sending money home, reflects underlying challenges for India's economy, including trade imbalances, foreign capital outflows, and global market volatility. These challenges, coupled with heightened trade tensions between the US and India, have unsettled markets and led to investors pulling more than $2 billion from Indian equities in July 2025, marking the rupee's worst monthly performance since 2022.
Despite these challenges, India solidified its position as the world's leading remittance recipient, with overseas workers sending a record $129.4 billion in 2025. Remittance outflows from the GCC dipped slightly by 0.4% in 2023, but the UAE remained a significant contributor, accounting for 19.2% of total inflows to India. The UAE's remittance industry is highly competitive, with dozens of exchange houses and banks offering both physical and digital transfer services.
In conclusion, the current depreciation of the INR against the AED in 2025 has made remittance transfers less valuable in Indian rupees for UAE-based Indian expatriates, thereby pressuring their income value and impacting remittance dynamics in the industry. The RBI and remittance service providers must navigate this challenging environment to maintain the robustness of the remittance flow and ensure the cost-effectiveness of transactions for expatriates.
- The depreciation of the Indian rupee (INR) against the UAE dirham (AED) has not only affected the personal-finance of Indian expatriates in the UAE, but it has also impacted the business of remittance service providers.
- In the remittance industry, while the depreciation may reduce the value of rupees received per transaction, it might also motivate expatriates to send more remittances to compensate for the lower rupee value.
- The lower value of the rupee received by families of Indian expatriates can create financial strain and put pressure on their income value, which in turn affects their lifestyle.
- Technology has played a significant role in the UAE's remittance industry, with digital platforms capturing a growing share of transactions, offering instant transfers and rate alerts.
- Investors have pulled more than $2 billion from Indian equities in July 2025, which, along with trade imbalances, foreign capital outflows, and global market volatility, have unsettled markets and contributed to the weaker rupee.
- Despite these challenges, the remittance flow from the UAE to India has remained robust, with the UAE remaining a significant contributor to total inflows to India, highlighting the importance of the remittance industry in both countries' economies.
