Indian rupee nears 100 against US dollar: What it means for Oman expats

The Indian rupee has weakened sharply against the US dollar, nearing the 100 rupee mark, a significant depreciation after a period of relative stability. This development presents a financial advantage for Indian expatriates living and working in Oman.

The rupee opened at 95.62 against the US dollar on Monday, falling to an intraday low of 96.24 before closing at 96.20. Meanwhile, exchange houses in Oman were offering around ₹249.70 for one Omani rial. This means Indian expatriates receive more value for every rial they send home.

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The rupee has once again come under pressure due to a combination of factors, including heightened geopolitical tensions in West Asia, rising crude oil prices, increased demand for the US dollar and continued capital outflows from Indian equity markets.

The Omani rial, pegged to the US dollar, has strengthened considerably against the Indian currency over the past two years. In 2024, one Omani rial was worth approximately ₹220 on average. Currently, it is trading in the ₹247-249 range, representing a gain of nearly 15 percent for earners in Oman. For an expatriate sending OMR500 monthly, the remittance now translates to nearly ₹125,000, an increase of about ₹15,000 compared to earlier in the year, without any change in their salary.

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Shipping costs, including war-risk insurance premiums, have already risen significantly, adding to the import bill of oil-importing countries such as India. This is expected to widen the current account deficit.

Adv. R. Madhusoodanan, a financial expert and former State Bank of India official based in Muscat, explained that the rupee is under pressure due to several factors. These include heightened geopolitical tensions in West Asia, rising crude oil prices, increased demand for the US dollar, and continued capital outflows from Indian equity markets. Brent crude is trading above $85 per barrel, and the US Dollar Index remains elevated. Madhusoodanan noted that increased shipping costs and war-risk insurance premiums are also adding to India's import bill, potentially widening the current account deficit and fueling inflationary pressures in oil-dependent economies.

While the weaker rupee benefits expatriates through increased remittance value, it also raises the cost of overseas travel, medical treatments abroad, foreign currency loan repayments, and education in foreign countries. The Reserve Bank of India has been intervening in the foreign exchange market to manage volatility, and recent measures have boosted India's foreign exchange reserves. However, sustained foreign investor outflows continue to pressure the rupee, which is expected to remain volatile in the near term.

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The rupee is likely to remain volatile in the near term. Its direction will largely depend on developments in West Asia and the extent of the RBI's intervention.