The Indian rupee (INR) appreciation has just rose to the best it has been within the past 30 days, and this creates the big question in the minds of the NRIs in UAE; is this the appropriate time to send Indian Rupee (INR) back home? Foreign exchange (FX) analysts reckon it is not quite time yet.
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Current INR-AED Exchange Trend
The currency began the day at 23.2 Indian rupees (INR) per UAE dirham (AED), near Monday evening levels at 23.11, its highest in a month. This implies that Indian expatriates sending money home in the UAE would receive less rupees per dirham now, than over the last 30 days.
Conversely, the lowest score of the INR in the last month was on June 23, where one dirham sold 23.62 INR which was a much better and greater rate when it came to sending money abroad especially to India by the NRIs.
Analysts Say: Wait It Out
The prospect of the INR devaluing in the near future has made currency analysts cheerful that NRIs will have more rupee value to change their dirhams too.
According to Neelsh Gopalan, Treasury Manager of a major remittance company, headquartered in Dubai, stated that, “the INR was signalling a weak trend today. Friday 23.11 was definitely an unlucky time to be an Indian expat. Then there is a possibility that the INR will heave back to 23.323.4 levels.”
It would translate to a higher value of remittance and bigger amount of rupees against a Singapore dollar dirham to the holders of delayed transfers.
What is Driving the Rupee Strength?
There are a number of factors that have worked out in making the rupee rather strong in the recent past:
- India boasts of a good forex reserve which is currently pegged at 698 billion and is stabilising the INR.
- To prevent a sharp depreciation, Reserve Bank of India (RBI) has actively got involved.
- The possibility of an impending US-India trade pact has put the rupee in a positive mood.
But these gains may not be very long lasting. With this, the performance of the INR will now greatly be subject to the dynamics of what is happening in the American economy, especially what will be the outcome of the newly enacted Big Beautiful budget bill.
Why the US Budget Bill Matters
The recently signed-off bill, promoted by President Trump, contains more than 1 trillion dollars in additional government spending and proposes massive tariffs on more than 500 categories of importation products – everything under the sun, including green technology and industrial components. Nigel Green, managing partner of deVere Group, called the bill potentially becoming the most inflationary economic action seen in the last 50 years.
Green said the bill opens the spending taps wide, and clogs worldwide goods. It is a risky bet on inflation, and it is one way that the rest of the world will foot the bill. The US markets are closed at the moment due to the Independence Day, and it seems that after the opening, investor sentiment and inflation data will impact the performance of the dollar. The general rule is that as dollar strengthens, the rupee will be weak; this is a bonus to the NRI wishing to remit.
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Where the Rupee Could Head
Subramanian Sharma, Promoter-Director at Greenback Advisory Services, said in case the dollar gains strength next week:
- The rupee might shift to the 23.25–23.5 levels against the dirham.
- As against the US dollar, this would come in as INR 85.4 to INR 86.2.
- In case the US enacts high tariffs or aggressive trade measure, it may bring the INR back down to INR 86.8 per dollar.
Final Word for NRIs
Sending a remittance to India is not a decision on which you should make an impulse. As the rupee is stable at a 30-day peak, waiting a few days until you transfer funds may reward you with a downtrend in the INR.
- The INR is strongest in 30 days hence remittance will not be that appealing.
- The exchange rates are likely to get better even next week basing on the activity of the US markets.
- Wait till INR gets weakened so that you can exchange more rupees with your dirhams.
- Monitor the situation with the US budget bill and US-India trade deal.
The right time is everything in the unstable currency markets. And in the case of UAE expats, the days ahead might mean that they will have a better opportunity to send money back home.