The head of the central bank says the country has no intention of diversifying its currency reserves away from the greenback.
UAE will not abandon dollar
MARRAKECH // The UAE is not diversifying its foreign currency reserves away from the dollar and its property problems have been exaggerated, the central bank chief said on Friday. Gulf countries have seen ambitious growth plans jolted by the global downturn, as oil and revenues have fallen and the construction and property sectors have slowed. "We are not diversifying our foreign currency reserves. We are sticking to the dollar," central bank governor Sultan Nasser al Suweidi told Reuters on the sidelines of a finance conference in the Moroccan city of Marrakech on Friday.
Asked about problems in the property sector in the Emirates, one of the top five world oil exporters, he said: "There are reports exaggerating the problems of the sector but we are okay." Within the UAE federation, Dubai's economy has been hit badly, with many construction projects held up. The emirate has outstanding debt of around $80 billion. The central bank in Abu Dhabi, the seat of UAE oil wealth, helped Dubai by taking up $10 billion in bonds.
"We are not worried about deflation. The United Arab Emirates economy is very competitive," Mr Suweidi said. The UAE minister of economy said in March inflation in 2009 would be in the range of 5 to 8 per cent. Inflation claimed to record highs in Gulf Arab countries last year but falling oil revenues and the global downturn have helped bring it down. The UAE, which has the second largest Arab economy, hopes to remain the biggest recipient of foreign direct investment in the Gulf region, accounting for 50 percent of capital inflows last year.