The Indian Rupee (INR) is currently under significant pressure due to several macroeconomic factors, while the UAE Dirham (AED) appears to be strengthening against a backdrop of supportive monetary policy. Recently, analysts have noted that the INR reached an all-time low of 88.62 against the US dollar in September 2025, spurred by decreased foreign equity inflows and an increase in US visa fees. The Reserve Bank of India (RBI) has intervened actively by expanding its dollar forward positions, reflecting its intent to stabilize the rupee amidst ongoing volatility.
October saw persistent demand for USD from importers, driven by uncertainty related to US tariffs and immigration policies, which further contributed to the rupee's weakness. Reports indicate that India's manufacturing exports are struggling, and a diminishing policy rate differential with the US is likely to maintain downward pressure on the INR.
On the other hand, the AED has gained strength due to recent developments. A notable currency swap agreement between the UAE and Turkey, along with a minor interest rate cut by the UAE central bank, has improved liquidity and investor confidence. This environment was further bolstered by the AED's appreciation against several Asian currencies, including the INR. As a result, the currency's value for remittances sent back by expatriates has increased, creating additional positive dynamics.
Currently, the INR to AED exchange rate stands at 0.041103, which is slightly below its three-month average of 0.041495, indicating some stability in a relatively narrow trading range. Analysts continue to monitor these developments closely, as the interplay between the strengthening AED amidst supportive policies and the struggling INR could affect international transactions, particularly for businesses and individuals engaging in trade between India and the UAE.
