The UAE dirham’s recent strengthening against the Indian rupee is making imports from India more affordable, helping to reduce inflation, analysts and retailers say.
Indian Rupee Hits Record Low
The Indian rupee recently dropped to nearly 24 against the UAE dirham, its lowest ever, due to the strengthening US dollar. Over the past year, the rupee has weakened from 22.5 to almost 24 per dirham, according to xe.com.
Food Prices Expected to Drop
Dr. Dhananjay Datar, chairman of Al Adil Supermarkets, noted that the weaker rupee will lead to lower food prices. He estimates a 15% reduction in the cost of Indian food and other imported goods. Al Adil Group alone imports over 10,000 food and non-food items from India.
India-UAE Trade Set to Grow
India remains one of the UAE’s biggest trading partners, with trade projections expected to reach $100 billion in the near future. Freight costs between the two countries have also decreased significantly due to an oversupply of shipping containers.
Lower Inflation but Economic Constraints
Hani Abuagla, senior market analyst at XTB Mena, explained that a stronger dirham makes imports cheaper, particularly from countries like India, where the currency has weakened. However, inflation in the UAE is still affected by rising housing costs and the dirham’s peg to the US dollar. While a stronger dirham may help ease inflation, its overall impact remains limited by global and local economic conditions.
