Indian rupee firms up again - UAE, Saudi Arabia's NRIs delay money transfers

02/05/2025 09:23 AST

It's proving to be a tough start to the month for Indian expats in the UAE, Saudi Arabia and other Gulf states, as they find they are getting less on their monthly fund flows home.

The dirham is getting 22.82 for one dirham, which is now the lowest difference since October 10, 2024. According to currency exchange houses, there's been a clear drop in INR remittance levels from the UAE and Gulf markets in the last 48 hours as NRIs look to see whether this firming up of the rupee is just temporary. Where possible, Indian expats are holding back on their next fund transfer home.

FX industry sources say that INR does look good to stay at the 23 or just under 23 to the dirham level. "The Indian rupee has shown a clear trend to push higher early today (May 2) to 22.82 against the dirham (83.86 against dollar)," said Neelesh Gopalan, Senior Currency Analyst. "Early to mid- next week would be a good time to get a definite trend-line on where INR is heading."

How's INR faring against Saudi Riyal?
On February 10, the INR was fetching 23.41 to the Saudi Riyal, and easily the lowest point so far this year. The highest point for the INR is today's 22.36 for one SR.

In fact, "The INR has appreciated sharply over the last three weeks," said Rohit Chawdhry, co-founder of the consultancy Cross Alpha. "It is possible that the USD-INR may consolidate in a range of 83.30 to 84.30 in the near term."

Foreign fund inflows
Meanwhile, dollar inflows into Indian stock markets continue, adding another cushion to the INR. That's happening even with the tensions simmering over what next after the Pahalgam attacks.

"Between April 15 until April 30 (May 1 was a holiday), foreign institutional investors and FPIs (foreign portfolio investors) have been net buyers in the Indian markets," said Milan Vaishnav, Senior Market Analyst at ChartWizard.ae.

"The Pahalgam fallout is at the back of (investors') mind -- we see it in the form of rising VIX (the risk index), which means that there is increase in the hedging activities by players."

Gulfnews