Vijay Valecha, Chief Investment Officer for Middle East markets at Century Financial says the UAE and Saudi Arabia would benefit the most among Gulf countries from a weakening U.S. dollar.

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Vijay Valecha, Chief Investment Officer for Middle East markets at Century Financial, stated that the UAE and Saudi Arabia are likely to benefit the most among Gulf countries from a weakening US dollar. The currency peg to the dollar means that a weaker dollar can boost tourism, exports, and real estate sectors, particularly in Dubai, by making these markets more attractive to foreign buyers and investors.

Valecha also noted that while recent regional conflicts have temporarily slowed foreign capital inflows, the UAE and Saudi Arabia continue to account for the majority of such inflows in the Gulf. He added that US tariffs are not expected to significantly impact business in the region, and highlighted Saudi Arabia's progress in diversifying its economy, especially through clean energy partnerships such as recent deals with Indonesia.

UAE, Saudi Arabia big gainers from a weaker USD: Strategist

One of the other interesting things we're watching globally right now is the fact that the US dollar continues to stay in the doldrums here as well. When you look at the translation for the UAE and for Saudi Arabia, because of the currency peg, this should really help tourism. It should also help exports as well. Do you think local equity markets are reflecting that reality? The local equity markets are banking on the fact that the US dollar is falling and the prediction that the US dollar might get weaker in the next six to eight months more so. Even if the interest rates do not come down by more than two or three basis cuts, let's say that we'll get from the Fed this year, we still expect the dollar to actually weaken a little further and that weakening will help not the entire region but yes definitely UAE and Saudi will be the biggest gainers from it. Dubai the first gainer because the tourism infrastructure is very much in place and any kind of dollar depreciation adds a huge boost to the tourism, also adds a huge boost to the real estate. So we have to understand that real estate buyers from outside are mainly countries from emerging markets. For them the dollar makes a huge difference. A lower dollar really impacts their buying price of the real estate. So any fall in the dollar will be a very good positive for UAE and Saudi, not so much for the rest of the GCC countries. Indeed and of course what we've seen is the UAE and Saudi accounting for the majority of GCC foreign capital inflows in recent years as well. That's going to be particularly interesting to watch in the aftermath of this 12-day conflict between Israel and Iran because it's also been suggested to me that perhaps sentiment has taken a hit as a result and we might actually see some of those capital flows slowing down. What are your thoughts on that? We did see a little bit of panic coming in two weeks back. Besides that the inflows in the UAE and Saudi have just slowed down by probably a month. I do not see a natural slowdown coming in in the inflows of Saudi and UAE. UAE and Saudi have accounted for more than 75% of the inflows coming in side of the in the region and that should I think sustain and more importantly that inflows should be coming in much faster. I think last year was the first year that we saw higher inflows and outflows from the region and that should continue for the next four or five years also. So yes a slowdown for a month or two maximum but overall I think the region is safe and it does look like the investors will definitely feel that this is a good safe region to be in and we have to understand that if interest rates do drop you know DFM and ADX have very high dividend yielding stocks as indices as well. So we will see inflows coming in not just in the index but also in the broader economy. Vijay how concerned are you about the impact of US tariffs and current trade flows and the fact that there hasn't been much progress if any at all on getting this issue resolved between the Gulf leaders and the United States? I guess we are in the few lucky people who are in the region where the tariffs won't be impacting as much as the rest of the world. We saw Vietnam getting a 20% tariff and 40% on the exposure coming into Vietnam. A similar tariff rate could be expected for the UAE and for the Saudi. The major concern obviously again being that if ship if goods are being shipped into the UAE and being repackaged and being sold out. So transshipment might have a 40-45 percent tariff but besides transshipment I don't think business will be impacted by the tariffs in this part of the world. What will be impactful is that we will see that if China tariffs don't work well and if the dollar gets higher for that that becomes a problem for the region but the direct tariffs with the US not that big a problem. We will see definitely a trade deal happening between the UAE and India possibly also with Japan and those will actually move the markets a little more than the US trade deal so far. Let's shift focus quickly to the energy space as well. We've just seen Saudi Arabia signing 27 billion dollars worth of clean energy and petrochemical deals with Indonesia. How transformative do you think that partnership could be for both economies and who receives the most benefit as a result? I think Saudi Arabia is definitely the person to gain the most from this. Saudi Arabia is well placed in their non oil economy in expansion. They're doing a really really good job at it. Alternative energy is just a part of that program. Overall the entire development around the non oil sector is growing in the Saudi at a very very fast pace. Saudi is poised to be pretty much a 50% non oil country by the by 2040 and by the looks of it they're going at a much faster pace than that as well. So we do expect that Saudi will be the biggest gainer from this deal. There will be potential gains from other countries but Saudi Arabia is well poised to gain the maximum from it.

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UAE, Saudi Arabia big gainers from a weaker USD: Strategist

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