In the UAE, demand for foreign currencies has surged 40%, driven by the onset of the school holiday season and summer travels. Major currencies such as the US dollar and euro are highly sought after, with exchange companies providing competitive rates over banks. This trend is expected to persist throughout the summer months.

Currency exchange officials and banking experts have noted a significant rise in the demand for foreign currencies, with a reported increase of 40% compared to previous months. This surge coincides with the start of the school holiday season and summer vacations, as families embark on international travel.

There is a marked increase in demand for major currencies, particularly the US dollar, euro, British pound, and Swiss franc. Exchange companies are offering more competitive rates, especially for large amounts, compared to banks due to their narrow profit margins. This demand is expected to remain high through the summer, fueled by many travelling abroad.

Despite the expansion of electronic payment methods, cash demand remains strong, as many travelers prefer to carry emergency cash on their trips.

Osama Al Rahma, Chairman of the Board of the Foreign Exchange and Remittance Group, stated, "The summer is a peak season for exchange companies, experiencing a high demand for foreign currencies with the onset of school and employee vacations, increasing demand for major currencies and a notable uptick in money transfers, especially to Arab countries. The demand is likely to persist until the end of the summer."

He noted, "The US dollar is the most sought-after currency, given its global acceptance, followed by the euro and British pound, along with some Asian currencies for those travelling to East Asia."

Key Factors Driving Demand

Al Rahma added, "The foreign exchange and currency markets are bustling with the onset of the travel season. The advent of summer dramatically increases demand for certain foreign currencies compared to other months and seasons."

Most Demanded Currencies

Adel Ahmed Al Khoury, Executive Director of Al Bader Exchange, noted, "There is a substantial increase in foreign currency demand as the holiday and travel season kicks off, with the dollar being the most requested currency used for travel to the US or other countries accepting it, as well as in some Arab countries due to the devaluation of local currencies. The euro follows suit for travel to Europe, with demand increasing by 20 to 40% compared to other months, then the Swiss franc and, to a lesser extent, the British pound."

"Exchange companies offer more competitive rates, especially for large amounts, compared to banks due to their low-profit margins, along with flexibility in negotiating rates with regular customers. The dirham plays a crucial role in price stability due to its stable exchange rate with the dollar (3.67 dirhams per dollar), which prevents sudden fluctuations and ensures price stability, even during peak seasons," he noted.

Anticipated Sustained Demand

Al Khoury expects, "The demand will remain high until the end of the summer, coinciding with many traveling abroad. Demand also hinges on other factors such as airfare prices, with travel deals to destinations like Turkey or Egypt increasing demand for the dollar and euro."

Best Exchange Rates

Banking expert Ahmed Arafat stated, "The demand for foreign currencies is significantly rising as the summer season begins and families travel abroad for vacations, with numerous individuals heading to different tourist destinations. The currency market will witness growing demand throughout July and August, exceeding any other months."

He explained, "Exchange companies often provide better exchange rates compared to banks, especially for large purchases of thousands of dollars. There is no noticeable effect on local exchange rates during the summer season despite increased demand because exchange rates are tied to global prices and affected by significant economic factors, not just local demand."

Tenfold Increase in Transactions

Arafat noted, "The US dollar is the primary currency in demand during the travel season, closely followed by the euro, as they are the most needed currencies for travelers for tourism, shopping, or covering expenses. The British pound follows, with demand for it remaining limited. Meanwhile, the Saudi riyal sees increased demand only during Ramadan and Hajj seasons; however, the dollar continues to be the most sought-after currency due to its stable exchange rate and widespread use, making it the first choice for travelers."

He pointed out, "With the travel season in full swing, daily currency exchange transactions can reach more than a thousand, equivalent to ten times the usual volume."