Purchasing power suffers a direct hit

Sunday, May 27, 2007

Gulf News

Dubai: UAE residents say diminished purchasing power is affecting their ability to remit and invest money in other countries, as the dirham continues to lose ground against other major currencies.

With the UAE home to about 200 nationalities and billions of dirhams are remitted from the country every year, residents of many nationalities report being hit by the falling dollar, saying it is becoming increasingly difficult to send money home for investments or to families.

Jeevan, a car cleaner from India, said moving to the UAE is no longer as attractive for Indians, attributing the change to the improving economic situation in India coupled with the declining dirham.

"Before, it was every Indian's dream to move to Dubai and remit Arab currency, but that is changing. It has become too competitive here and the Indian economy has improved," he said.

Despite that, he added, it was still feasible to live in Dubai. "The dirham has dropped significantly, but it's still worth a lot there."

"It hasn't affected my parents much because it's not a big amount. The only thing that has changed is that when travelling to Syria, I now take euros instead of dollars to avoid carrying a lot of cash."

Dilemma

For Norwegian Hewad Wolasmal, the falling currency has even impacted his ability to travel back to his home country. "My purchasing power in Europe has been greatly impacted, meaning that this summer we are reducing our holiday from one month to two weeks," he said.

Likewise, with the dirham hovering around an all-time low against the pound, Briton Simon Lewis told Gulf News that finding extra money to supplement mortgage payments back in his home country is becoming more of an issue.

"Gone are the days when you could actively save here. It is becoming a bit of a dilemma for expats because with the dollar dropping and imports becoming more expensive, you're really starting to pay for the lifestyle here now."

However, for UAE national Jawad Sajwani the slump has not had much of an adverse affect, given that he is paid in dirhams and chooses to invest his money exclusively at home.

"The only thing is that for holidays we now choose to go places like Malaysia, as Paris has been priced out of our league," he told Gulf News.