The Indian Rupee (INR) has faced significant downward pressure recently, dropping to record lows against the U.S. Dollar. As of September 5, 2025, the INR reached 88.36 per dollar, largely due to the imposition of new U.S. tariffs on Indian exports and ongoing foreign portfolio outflows. These tariffs, which include a substantial 50% levy on some goods, have strained relations between the U.S. and India and adversely affected foreign investor sentiment. In light of these developments, the Reserve Bank of India (RBI) has intervened in the foreign exchange market, selling dollars to stabilize the INR around the 88.30 mark.
Despite this volatility, recent forecasts suggest a more stable outlook for the INR in the short term. A Reuters poll conducted from September 1-3 indicates expectations of only modest fluctuations, with analysts predicting an end-of-September rate near 88.04 and maintaining a level around 88.00 within the following year. This viewpoint reflects a cautious optimism that significant declines may be averted.
Conversely, the United Arab Emirates Dirham (AED) has also experienced depreciation, reportedly falling by approximately 8% against the British pound due to the impact of U.S. tariffs. Despite this, the UAE's economy remains resilient, characterized by strong consumer spending and record foreign direct investments. The ongoing development of a 'Digital Dirham' initiative by the Central Bank of the UAE highlights efforts to enhance economic stability. However, a weaker U.S. Dollar continues to influence Gulf currencies, raising costs for imports and possibly contributing to inflation in the region.
In recent trading, the INR to AED exchange rate is at 90-day lows, around 0.041607, which shows a decline of 1.6% from its three-month average of 0.042271. This rate has remained relatively stable within a narrow range of 3.4%, signaling some consolidation amidst increasing market pressures. For businesses and individuals engaged in currency transactions between the INR and AED, this environment emphasizes the importance of monitoring terms and rates closely as geopolitical and economic influences continue to shape the landscape.
