Dubai: Businesses in the UAE are optimistic that the weaker dollar will help bring in more tourists and shoppers to the UAE this year.

The dollar, which the UAE dirham is pegged to, has weakened on average about 7 per cent, reversing a strong trend last year when it gained around 8.2 per cent. The recent drop is due to the US Federal Reserve softening its stance on interest rate increases due to concerns over the US and global economy.

India is one of the the UAE’s top source markets for tourism, while Russians are considered an important demographic for luxury retailers.

The rupee has strengthened by as much as 3 per cent against the dollar this year; however, the Indian currency is now almost flat year to date. While the Russian rouble has gained 11.84 per cent so far this year, it has fallen by 50 per cent against the dollar compared to two years ago. The Russian economy has been struggling over the past 12 months due to the lower oil prices and western sanctions imposed on the country.

“The weak dollar will have a positive effect on incoming business especially from markets such as Russia and India,” said Russel G.H Sharpe, chief operating officer of Citymax Hotels, which has properties in Dubai and Sharjah, attributing this to the stronger rupee against the dollar and the school holidays in India.

He expects the number of individual visitors from India to the UAE to continue growing until August, and pick up again in October.

Sharpe has also seen “a slight increase” in the number of guests from Russia so far this year.

“If the dollar continues to weaken, we should see positive signs from October with increases from these markets,” he said.

Lama Tours’ managing director Kulwant Singh said that the tour operator has seen an 11 per cent increase in Indian customers travelling to Dubai in the first quarter of this year compared to the same period in 2015.

The stronger rupee and the shortage of hotels in India means travelling to short haul destinations, such as Dubai, is more affordable than to some destinations within India, according to Singh.

Manu Jeswani, group director of Shoe Mart, also said that Indian business has increased since the beginning of the year due to the stronger rupee. But there is still less demand from the Russian market, he said.

The Indian rupee may continue to strengthen further on hopes of a good monsoon and expectations of foreign flows.