Recent forecasts and market updates indicate a challenging outlook for the Indian Rupee (INR) against the UAE Dirham (AED). The INR has recently struggled, reaching a historic low of 88.62 against the US dollar, largely due to increased US visa fees and reduced foreign equity inflows. Analysts have pointed out that ongoing demand for dollars from importers, compounded by concerns around US tariffs and immigration policies, continues to exert downward pressure on the rupee.
The Reserve Bank of India has intervened by expanding its short dollar forward positions to stabilize the currency, an action that reflects the urgency of the situation. Despite these efforts, weak manufacturing exports and a narrowing policy rate differential with the US could further challenge the rupee, as detailed in recent reports.
In contrast, the UAE Dirham has demonstrated strength, particularly after the UAE central bank's interest rate cut in September 2025, which has buoyed local investor confidence and contributed to rising stock markets. Moreover, the AED has appreciated against several Asian currencies, including the INR, which may enhance remittances for UAE expatriates sending money home. Additionally, a recent currency swap agreement with Turkey is expected to boost liquidity, adding to the AED's stability.
Currently, the INR to AED exchange rate is at 0.041416, just below its three-month average, suggesting limited volatility as it has traded within a narrow range. This stability, combined with the underlying factors affecting both currencies, indicates that the INR will likely face continued pressure while the AED could maintain its strength in the near term.
Analysts suggest that traders and businesses engaged in international transactions should closely monitor these developments as they could lead to further fluctuations in the INR-AED exchange rate, influencing costs for transactions and remittances. The current landscape indicates that stakeholders might benefit from strategic planning to mitigate risks associated with potential continued rupee depreciation.
