Dubai is witnessing a surge in Russian tourists thanks to a rebound in the value of the Russian rouble.
Hoteliers and retailers in Dubai are happy to see a spurt in Russian tourists while currency traders maintain the trend of a rising rouble is here to stay for awhile.
The beleaguered Russian currency is up 28 per cent this year, after witnessing a decline of 31 per cent last year and 68 per cent the year before that.
Dubai Tourism says Russia is among the emirate’s top 20 source markets, and welcomed 177,000 visitors in the first 10 months of 2016 alone in UAE – reflecting an eight per cent increase in figures from the same period last year.
Samir Mehta, general manager, Arabian Adventures, said: “Overall, we had a much better-than-expected 2016. The last quarter winter season, in particular, has been good with a growth of five per cent passengers compared to the last year.”
It isn’t just Dubai that’s seeing an influx of Russian tourists. Sharjah Investment and Development Authority (Shurooq) has been exploring business opportunities with Russian companies in extractive, primary, food and health industries.
Marwan bin Jassim Al Sarkal, CEO of Shurooq, said: “We welcomed 65,000 Russian tourists to the UAE in 2014 – a figure that we anticipate to grow with the 124 flights weekly now operating between the two countries.”
Mehta of Arabian Adventures lists the rise of the rouble as one of the primary reasons for the increase in Russian tourists to the UAE this year. “Most of our [Russian] business came from last-minute bookings, and potentially was due to more stabilised rouble versus the dollar,” he says.
“Secondly, our customers are high-end and were less affected than mid-range tourism. We also worked with new partners who increased the number of business through us. Finally, we received more traffic due to travel restrictions placed on other destinations as advised by the Russian Tourism board,” Mehta says.
That’s ‘Welcome to Dubai’ in Russian. Shurooq’s Al Sarkal says UAE and Russia share cordial relations, which is giving a boost to tourism and business ties between the two nations. “Emirati-Russian relations are a role model for international relations at all levels and in all sectors, including trade, economy and culture. We have a strong community of Russian expatriates living in the UAE and thousands of the country’s citizens visit every year,” he says.
“Up to 2015, 607 out of 3,000 registered companies operating in the UAE chose Sharjah as their headquarters, operating primarily from Hamriya Free Zone Authority and Sharjah International Free Zone (SAIF Zone). This reflects the growing business opportunities which Russian investors can enjoy thanks to the existing facilities and services Sharjah has established across its array of free zones and its wider business landscape,” adds Al Sarkal.
“Looking at how fluctuating 2016 turned out to be, many factors will affect such a forecast and at this moment it is hard to predict. We do however looking optimistic and aim to increase the numbers in 2017 against 2016,” maintains Mehta.
Currency analysts are cautious and watching the rouble trends. The US dollar’s resurgence amid the rising prospects of higher US interest rates in 2017 could provide a platform for bulls to browbeat the rouble. Additionally, concerns over Opec and non-Opec respecting their pledge to slash production could also weaken the rouble in the first half of 2017.
Although Russia’s central bank has decided to hold benchmark interest rates steady at 10 per cent at its December’s meeting, the speculations of a potential rate cut in 2017 could pressure the rouble.
Rouble’s rapid rise
Lukman Otunuga, Analyst, FXTM Research, said: “The Russian rouble has been chaotic against the US dollar in 2016 as the explosive combination of oil price sensitivity and fluctuating expectations of the Federal Reserve raising US interest rates sparked extreme levels of volatility. Although the USD/RUB started 2016 on a positive note with prices hitting yearly highs of 85.95, the trajectory has gravitated to the downside.”
Otunuga further explains that the striking difference between how the rouble has traded against the dollar in 2016 compared to 2015 is that this year is concluding with the USD/RUB closing at yearly lows. With the oil deals elevating prices to 2016 highs, rouble bulls have been installed with inspiration, which is helping rouble conclude the year around the psychological 60 level against the dollar.
Bachir Chaaya, instructor, Online Trading Academy, said: “The Russian rouble in 2015 dropped 31 per cent against the dollar, and this happened on top of a previous drop of 68 per cent in 2014. However, 2016 witnessed a major turning point in the value of rouble against the dollar, after reaching a bottom in January 2016, the rouble managed to rally by 28 per cent since then and has created a new healthy uptrend, as a net the rouble has rallied by 17 per cent against the dollar for the year 2016.”