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Indian rupee hits record low but Gulf remittances stay strong, analysts say
India’s forex reserves are relatively stable. Reserve Bank of India figures revealed that they jumped by $6.3 billion for the week ended May 8, to almost $697 billion
- PUBLISHED: Tue 19 May 2026, 7:41 PM
Remittances to India from the Gulf region are likely to remain stable, analysts said, after the Indian rupee plunged to record new lows on Tuesday. The rupee slipped to 96.61 against the US dollar before settling at 96.36; against the UAE dirham, it fell to 26.23, which is likely to encourage NRIs (non-resident Indians) to remit more funds home.
“The rupee closing at a record low against the US dollar is a stark reflection of India's external balance sheet being aggressively repriced by unprecedented global macroeconomic shocks,” Santosh Meena, head of Research at Swastika Investmart, told the media. “This isn't a standard, routine depreciation cycle; it is a structural reaction to a highly volatile global environment," he added.
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According to Meena, while the Reserve Bank of India (RBI) has “formidable forex reserves to step in and smooth out extreme intraday volatility, it cannot entirely shield the local unit from macro realities like a choked Strait of Hormuz or spiraling import bills.”
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India’s forex reserves are, however, relatively stable. RBI figures revealed that they jumped by $6.3 billion for the week ended May 8, to almost $697 billion.
The Ministry of External Affairs has also asked the Ministry of Skill Development and Entrepreneurship to speed up fast-tracking of skilled worker mobilisation for different countries, including opportunities in Russia, Japan and Israel.
The UAE, Saudi Arabia and other Gulf countries continue to be a major source of remittance for India.
The World Migration Report 2026, released by the International Organization for Migration, noted India continued to be the largest recipient of remittances in 2024, when it amounted to $138 billion. The report “highlights how rising high-skilled migration and record remittance inflows of $138 billion is rewriting India’s growing global footprint,” said the Indian Ministry of External Affairs.
Many NRIs in the Gulf have dependents in Kerala, which accounts for nearly a fifth of India’s total inward remittances. The ongoing Iran war has caused some to worry about the flow of funds over the coming months. But banking sector officials maintain there is a steady flow of remittance to the state.
“Unless you see significant job losses and Indians returning for good to India, I don’t think this story is likely to change immediately,” K.V.S. Manian, managing director and CEO, Federal Bank told analysts. “As of now, we are seeing positive trends.”
South Indian Bank reported a more than four per cent rise in inbound flows recently. The current crisis will in the short run be positive for banks, P.R. Seshadri, managing director, told reporters. NRIs in the Gulf may want to transfer money back home so as to protect themselves in the future, resulting in increased flows, he added.
