US Tariffs to Strengthen Dirham and Gulf Currencies, Impacting Business in Dubai

The latest US tariff policies are expected to strengthen the US dollar, consequently boosting Gulf currencies like the UAE dirham, which is pegged to the dollar. This shift will have significant effects on businesses in the region, particularly for those involved in setting up a company in the UAE, corporate services in Dubai, and financial sectors looking to open a bank account in Dubai.

According to a recent analysis by Goldman Sachs, the stronger US dollar—driven by tariff-induced inflation and Federal Reserve policies—will lead to tighter global liquidity. As Gulf currencies appreciate alongside the dollar, imports into the region will become more affordable, benefiting businesses reliant on international goods. However, this could also make business in Dubai more expensive for foreign investors and tourists, potentially affecting retail, tourism, and non-oil exports.

A stronger dirham could also influence corporate financing in the UAE. With rising US interest rates, borrowing costs in the UAE are likely to increase, impacting companies looking to expand or invest in new ventures. This could be a key consideration for entrepreneurs setting up a company in the UAE, especially in industries that depend on financing and international trade.

Despite these challenges, a robust dirham can attract more foreign investment, particularly in real estate and infrastructure, where currency stability is a crucial factor. Additionally, companies specializing in corporate services in Dubai may see increased demand as foreign businesses seek expert guidance on navigating currency fluctuations and financial planning.

As the global economic landscape shifts, businesses in Dubai and across the Gulf will need to adapt to changing trade dynamics, ensuring they remain competitive amid a strengthening currency and evolving market conditions.