Government bank deposits rose by 8.3 per cent last month, according to the latest figures from the Central Bank of the UAE.
The amount of money deposited by the Government last month increased to Dh172.9 billion – up from Dh159.6bn in October as oil prices staged an end-of-year surge.
November's increase came after the amount of money the Government deposited in the Central Bank dipped to its lowest level in seven months in October, broadly following oil price fluctuations.
In October, the Brent crude price surged to its second highest level of the year, peaking at US$53.14 a barrel on speculation that Opec would strike a deal to reduce output.
The price then dipped in November before rising to its highest level of the year this month after the deal was reached on November 30, increasing the likelihood that deposits will increase again at the start of next year.
Government deposits for the year up to the end of November averaged Dh168.8bn, down slightly from the Dh170bn deposited last year when the oil price was also low.
The average for this year is also down by 11.7 per cent from 2014, the year that the oil price started to slide from historic highs.
The low oil price has led the UAE and other Arabian Gulf governments to withdraw cash from the banking sector, seeking to finance growing fiscal deficits. However, with the oil price expected to increase further next year, many analysts predict that deposits will continue to increase.
The increase in government deposits for last month came as the Central Bank also reported an increase in the supply of money in the UAE.
The bank reported that M3, the broadest measure that includes cash balances and bank deposits across the economy held by individuals, companies and the government, increased by 1.7 per cent to Dh1,385.5bn in November from Dh1,362.9bn at the end of October. M3 is often seen by economists as a forward indicator of economic activity.
“M3 increased due to the rise of Dh13.3bn in government deposits,” the Central Bank said on Sunday.
The Central Bank said the amount of money it holds overseas fell for the second month running last month.
It said total foreign assets for last month fell to Dh285.16bn, down from Dh295.08bn the previous month, but up from the Dh284.82bn a year ago.
lbarnard@thenational.ae
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