Remittances to Al Ansari Exchange are increasing significantly, mirroring the Indian rupee's approach towards unprecedented lows compared to the UAE dirham.
Indian Rupee Depreciates Against UAE Dirham Amid Economic Pressures
In 2023 and through 2025, the Indian Rupee (INR) has depreciated against the UAE Dirham (AED), primarily due to a combination of domestic and external economic factors.
The depreciation of the INR against the AED can be attributed to several key factors:
- Higher inflation in India: Compared to the UAE, India has experienced higher inflation rates, reducing the purchasing power of the rupee relative to the dirham.
- Trade deficit pressures: India's import demand and trade balance often weaken the rupee, especially if remittances or exports to the UAE do not sufficiently offset imports.
- Global economic conditions and USD strength: Since the AED is pegged to the US dollar, a stronger USD exerts downward pressure on the INR, which floats more freely and is vulnerable to dollar strength.
- India's monetary policy stance: Interest rate differentials and interventions by the Reserve Bank of India (RBI) influence the INR value. Any tightening in India or relative easing in the UAE/US contexts impacts currency movement.
- Capital outflows or weaker investor sentiment: Towards Indian assets compared to more stable UAE financial conditions can contribute to INR depreciation.
By the end of 2025, the exchange data shows that the INR to AED rate declined by about 0.3%, meaning the rupee weakened. The UAE dirham to INR rate was up around 2.5% in 2025, confirming the sustained relative strength of the dirham.
The depreciation of the rupee against the dirham reflects India's inflation, trade deficits, global USD trends, and differential economic conditions between India and the UAE. This depreciation is approaching the rupee's weakest levels in recent history.
In July, there were foreign equity sell-offs worth over $2 billion due to these uncertainties, making it the rupee's worst-performing month since 2022.
Amidst these ongoing pressures in the currency markets, Al Ansari Exchange, a major remittance and foreign exchange provider in the UAE, has reaffirmed its commitment to maintaining reliable, secure, and transparent remittance services. The company has scaled up liquidity across its branch and digital network to meet the increased demand for remittances due to the current exchange rate. Additionally, Al Ansari Exchange has implemented special offers and launched promotional campaigns, including rate alerts via its mobile app, to cater to the growing demand.
[1] Source: Reserve Bank of India (RBI) Monetary Policy Report, 2023 [2] Source: UAE Central Bank, Exchange Rate Data, 2025 [3] Source: World Bank, India Trade Data, 2023-2025
- The depreciation of the Indian Rupee against the UAE Dirham over 2023-2025 is not limited to economic pressures, as the World Bank's India Trade Data for 2023-2025 suggests a correlation between trade deficits and the INR's weakness.
- The history of the Indian Rupee shows that external factors such as global economic conditions and the strength of the US dollar can have a significant impact, as the UAE Dirham is pegged to the USD.
- Understanding the impact of these economic pressures is vital in finance, especially in the business world and finance news, as it can affect remittances and foreign exchange rates, like the one observed by Al Ansari Exchange in the UAE, which has taken steps to accommodate increased demand caused by the INR depreciation against the AED.
