United Arab Emirates: A Safe Haven for Investment Amid the Iran-Israel Conflict and the Temporary Decline of the Dollar

Dubai

In an international landscape marked by geopolitical tensions and monetary volatility, the United Arab Emirates (UAE) has solidified its position as a strategic destination for foreign investment. The combination of a favorable exchange rate—stemming from the dollar’s temporary weakness against the euro—and the UAE’s active neutrality in the Iran-Israel conflict reinforces its status as one of the safest and most profitable markets in the Arab world.

Exchange Rate as a Tactical Advantage

The US dollar has depreciated by over 12% against the euro so far in 2025, reaching historic lows. This depreciation has strengthened the purchasing power of European investors in dollarized markets like the UAE, where the dirham maintains a fixed parity with the dollar (1 USD = 3.6725 AED). This means that UAE assets—from real estate to corporate equity—are now more accessible to those operating in euros.

According to Bankinter’s analysis team, the dollar is undergoing a structural weakening phase but is expected to recover starting in 2026, driven by a more restrictive monetary policy from the Federal Reserve and improved macroeconomic indicators in the US. They estimate a EUR/USD exchange rate range of 1.17 to 1.185 for the second half of 2025, with a gradual reversal beginning in the first quarter of 2026.

The Market Expectations Survey (REM) by the Central Bank of Argentina, which compiles projections from 39 international analysts, also anticipates an acceleration in the exchange rate by 2026, with a stronger dollar following the removal of currency restrictions.

Robust Economic Environment and Asset Appreciation

Beyond exchange rates, the UAE offers an exceptionally favorable economic and legal environment. With an AA2 credit rating and over three decades of internal stability, the country has cemented its reputation as a regional investment hub. Initiatives such as Dubai’s D33 Agenda and the UAE 50 Economic Plan have driven reforms facilitating foreign investment in strategic sectors like technology, clean energy, healthcare, tourism, and finance.

The fiscal framework is also highly competitive, featuring:

• Free zones with full or partial tax exemptions.

• Subsidies for solar energy projects.

• Frozen land prices since 2015.

• Transfer pricing systems aligned with OECD standards.

  
  

Endorsement from the IMF and International Banks

The International Monetary Fund (IMF) has projected a 5.1% growth rate for the UAE economy in 2025, driven by economic diversification, foreign investment, and institutional stability. In its World Economic Outlook (WEO) report, the IMF highlights the UAE as one of the most resilient economies in the Middle East, with controlled inflation and a regulatory environment conducive to sustainable growth.

Major financial institutions such as JPMorgan Chase and Goldman Sachs have noted in their regional strategy reports that the UAE represents "a secure platform for investment in the MENA region," emphasizing its exchange rate stability, openness to foreign capital, and political neutrality as key factors attracting institutional investment.

Active Neutrality in the Iran-Israel Conflict: Operational and Legal Security

While the region grapples with the Iran-Israel conflict, the UAE has maintained a stance of active neutrality, grounded in diplomacy and non-intervention. According to the Emirati newspaper Al-Arab, the UAE has reinforced its foreign policy based on peaceful conflict resolution, avoiding military alignment or sanctions.

The UAE Ministry of Foreign Affairs has stated that "regional stability is a national priority" and that "no citizen or company in the UAE will be affected by the conflict." This position has been reinforced by uninterrupted operations at the country’s airports and logistics centers, even after the US entered the conflict.

Additionally, Iranian President Masoud Pezeshkian has confirmed that his country will respect the ceasefire agreed upon with the US "as long as Israel does not violate it," further reducing the risk of regional escalation that could impact the UAE’s legal and operational security.

Conclusion: A Strategic Opportunity with Institutional Backing

Investing in the UAE today represents a strategic decision, supported by:

1. Temporary exchange rate advantages due to the dollar’s depreciation.

2. A stable and investor-friendly legal framework, with fiscal incentives and security.

3. Verified political neutrality, mitigating geopolitical risks.

4. Economic growth projections backed by the IMF and global financial institutions.

   
   

Given the anticipated dollar recovery in the medium term and the UAE’s highly competitive regulatory environment, the current moment presents an optimal window for investment, with strong legal safeguards and profitability prospects.