The UAE dirham, pegged to the US dollar, stands to benefit from Donald Trump’s victory in the US presidential election, as the dollar surges in response to his win. On Wednesday, the greenback jumped nearly 2%, reaching a four-month high, and was poised for its largest single-day increase since 2020. The stronger dollar is expected to boost the UAE dirham, which tracks the US currency closely, strengthening it against major global currencies such as the euro, Japanese yen, and emerging market currencies like the Indian rupee and the Mexican peso.
Trump’s return to office is expected to trigger further strength for the dollar, particularly with the potential for his fiscal policies and interest rate decisions to support its position. George Pavel, general manager at Naga.com Middle East, explained that the dirham’s performance will mirror that of the dollar, benefiting especially from the strengthening of the greenback against emerging market currencies. “The dollar’s rise following Trump’s victory has already had a positive impact on the dirham, and the currency is expected to follow the dollar’s movements closely,” said Pavel.
Financial experts like Wael Makarem of Exness foresee the dirham continuing to gain strength, particularly against currencies from emerging markets. The surge in the dollar has already triggered a decline in the value of several currencies, including the Japanese yen and the Mexican peso, against both the dollar and the dirham.
In addition to currency markets, UAE equity markets have also seen positive reactions. Both the Dubai Financial Market and the Abu Dhabi Securities Exchange rose over 0.4% following Trump’s victory. Market analysts anticipate continued optimism for UAE stocks, especially given Trump’s historically strong ties with the region.
Despite the positive outlook, experts caution investors to wait for concrete policy details before making significant moves, particularly regarding trade and regional security. Trump’s foreign policies, especially his “America First” stance, could lead to uncertainty in global markets, but the UAE’s diversified economy is expected to remain resilient, with robust trade relations between the US and the UAE likely to continue.
