Donald Trump's victory in the 2024 US presidential election is expected to positively influence the US dollar and, by extension, the UAE dirham, which is pegged to the American currency. Following the announcement of Trump's win, the dollar surged by nearly 2%, reaching a four-month high. This rapid appreciation also boosted the UAE dirham against major global currencies, including the euro, Japanese yen, Indian rupee, and the Mexican peso.
Analysts in the UAE view this development favorably. George Pavel, general manager at Naga.com Middle East, explained that Trump's presidency signals potential dirham strength, particularly against emerging market currencies. “The dollar's recent surge amid political developments has already benefited dollar-pegged currencies like the UAE dirham,” he noted, adding that Trump's trade policies will be crucial to the dirham's trajectory.
Financial market strategists, such as Wael Makarem from Exness, echo this sentiment. He pointed out that Trump's fiscal policies and potential interest rate hikes could support a stronger dollar, further enhancing the dirham’s position. “The dollar's surge following Trump's victory indicates this trend, boosting the dirham automatically,” Makarem added.
The UAE’s equity markets also responded positively, with both the Dubai Financial Market and the Abu Dhabi Securities Exchange rising over 0.4%. Vijay Valecha, chief investment officer at Century Financial, suggested that the UAE's strong economic fundamentals, combined with Trump's past supportive policies for Gulf allies, set a positive tone for continued economic growth and investor confidence.
Trump’s “America First” policy, while potentially protectionist, is not expected to harm UAE markets. The longstanding UAE-US relationship based on trade and business, coupled with the UAE’s politically stable and investor-friendly environment, provides a buffer against global uncertainties. Valecha added that any sustained dollar strength would attract more investment inflows, supporting the UAE’s financial sector and broader economic growth.
