How does a weak dollar affect us?

UAE’s currency is attached to the US dollar and deflation in USD will weaken the local currency and higher prices. This inflation will affect the people in the country, there have been cases of violence and this affects our security. I think that UAE government should clarify what it’s planning to do on exchange policy.

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How does a weak dollar affect us?
Ministry of Economy figures show sharp increases for some imported items

The sliding US dollar is likely to trigger an increase in the prices of certain commodities in the UAE, but inflation overall will be muted by falls in global food and property prices, analysts say.
A tumbling dollar is traditionally viewed as a driver of commodity inflation for economies like the UAE, whose currency is pegged to the greenback, as it can translate to costly imports from many of the country's trading partners like the UK and Europe. On the flip side, a weak greenback can spur deflation in dollar-denominated products, including big-ticket items from countries like Korea, whose currency is declining against the dollar.
"As most of the regional currencies are pegged to the US dollar, and as, excluding energy exports, most of the countries in the region are net importers, a lower US dollar translates to lower purchasing power for the region. This could be a negative factor just as the market is stabilising with a slight positive bias in imports and exports volumes," said Kersi Patel, regional head of trade and supply chain Middle East, global transaction banking, HSBC Bank Middle East.
"A weaker US dollar will result in higher local prices for most imports coming into the region, the key exception being goods imported from China where the local currency has not appreciated recently as much as it has in case of India, Japan, Korea, Singapore, the UK and Europe — which are some of the major trading partners for the Middle East," he added.
Figures compiled by the UAE Ministry of Economy show prices of a few basic commodities have been increasing — some very sharply, in the period August 10 and November 2. At certain stores, the price of vegetables like red dry onions from India rose from Dh1.45 to Dh2.45 a kilo, up 69 per cent. The price of sugar from Australia also increased 9.2 per cent, from Dh6.50 to Dh7.10 per kilo, and Basmati rice (Tilda) went up 8.3 per cent, from Dh63 to Dh68.25 a kilo.
Kamal Vachani, director, Al Maya Group, which runs a chain of grocery stores in the UAE, said currency fluctuations indeed affect commodity prices. "[There will be no inflationary effects] if we are buying in US dollars, but in case we buy in other currencies, then prices will go up," said Vachani.
Recent data in HSBC's Global Trade Confidence Index report, which surveyed around 3,600 traders in 12 countries, showed that fluctuating foreign exchange is one of the top barriers to growing imports and exports business. In the UAE, about 24 per cent of traders consider fluctuating exchange rates as the chief obstacle, compared to 14 per cent in India and 17 per cent in Malaysia.
"To protect their margins, importers and exporters generally seek stability in exchange rates, rather than volatility. This is especially true for traders in re-export hubs like UAE, who, in the current market environment, are working on very fine profit margins," Patel says.Are you affected by the dollar's decline? What measures, if any, have you taken to deal with it?
The sliding US dollar is likely to trigger an increase in the prices of certain commodities in the UAE, but inflation overall will be muted by falls in global food and property prices, analysts say.
On the flip side, a weak greenback can spur deflation in dollar-denominated products, including big-ticket items from countries like Korea, whose currency is declining against the dollar.
Most of the regional currencies are pegged to the US dollar; a lower US dollar translates to lower purchasing power for the region.
Seeing that a weaker US dollar will result in higher local prices for most imports coming into the region.
The price of sugar from Australia also increased 9.2 %, from Dh6.50 to Dh7.10 per kilo, and Basmati rice went up 8.3 %, from Dh63 to Dh68.25 a kilo.
The currency fluctuations indeed affect commodity prices. EFG-Hermes is forecasting UAE inflation of 1.5 per cent next year.
Are you affected by the dollar's decline?