Dubai: The Indian rupee (INR) is once again under pressure, trading at 22.58 to one dirham after the Reserve Bank of India (RBI) reduced interest rates by another 0.25%. The move marks the second rate cut since February, bringing India’s base rate to 6%.
Interest rate cuts often lead to a decline in the rupee’s value, according to analysts.
“The RBI’s decision to cut rates will likely support the trend of INR depreciation,” explained Krishnan Ramachandran, CEO of Barjeel Geojit Financial Services. 
For Indian expats in the UAE and Gulf countries, this could spell good news. Recently, the rupee had been strengthening against the dirham and dollar, briefly reaching 23.2-23.3 levels. A drop to these levels—or even lower—could be an ideal opportunity for Non-Resident Indians (NRIs) to send money home.
The INR, currently hovering around 23.50, could soon see a return to the 23.80 levels, which were last seen in early March,” said Neelesh Gopalan, Senior FX Analyst at a Dubai-based fintech.
The lowest point for the INR was 23.94 on February 10 this year.
What’s Next for the Rupee?
“After a depreciation of approximately 1.90%, the rupee now trades at 86.64 against the dollar,” stated Foram Chedda, Technical Analyst at ChartAnalytics.co.in.
“This confirms that the recent rupee strength was only temporary. The broader trend still points toward a weaker rupee, especially given ongoing global trade tensions and market volatility.”
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Meanwhile, in the Indian stock markets, the BSE and Nifty indexes are facing a slight decline. The BSE declined by 0.35%, and Nifty fell by 0.5%. “It could have been worse after President Trump’s statement about possible tariffs on US pharmaceutical imports,” said a market analyst. “But Indian stocks have remained relatively resilient so far.”
Bank Deposit Rates and Loans
After the February rate cut, Indian banks refrained from altering their deposit rates, preferring to keep them stable until the close of the financial year. However, the latest rate cut could bring changes in the coming weeks.
Home Loans: Will the Rate Cuts Bring Relief?
“Home loan borrowers may not see significant immediate relief,” said Anuj Puri, chairman of Anarock Group. “Banks have not fully passed on the earlier rate cuts due to higher funding costs and cautious lending practices.”
However, if banks do implement the recent rate cuts, it could provide a boost to homebuyers, especially those in the affordable housing segment. First-time homebuyers, who were previously hesitant, may take action if home loan rates decrease. Existing borrowers could negotiate a lower rate or explore balance transfers, though partial relief is expected.
