Dirham Strengthens Against Rupee, Pound; Food prices will decrease by 20%

Dirham Strengthens Against Rupee, Pound; Food prices will decrease by 20%
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DUBAI: Inflation in the UAE will be controlled by the depreciation in the rupee and the lower cost of goods movement. The country’s ability and willingness to buy food products increased as the dirham weakened against the rupee. The reduction in shipping costs will result in a drop of up to 20% in food prices.

The UAE will also be benefitted by the depreciation in Pakistan Rupee and British Pound, along with India. Due to the devaluation, more food items can now be imported at a lower price. This is evident in the market. Food prices have also been affected by an increase in freight costs (container fees). The UAE imports the largest number of food items from India, Pakistan and other countries.

The Depreciation in the Rupee

The rent has fallen due to the increased use of large containers for cargo movement. The rent for a 20-foot container is now $375, instead of $1100. It is expected that the cost of renting a 20-foot container will drop to $100. The cost of transporting goods will decrease, which will lead to a drop in the price of food and other necessities. Positive changes have been seen in the container rental market. Container rent, which was 450 USD until last week, has risen to 375 USD in a matter of weeks.

Economists claim that freight costs have fallen by 57 percent. The Covid period saw a significant increase in rent as the demand for containers increased. Container shortages were also a problem in the Middle East. Import costs have been a major factor in reducing inflation. The cost of import goods from these countries has fallen due to the appreciation of the rupee/pound.

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