UAE: Bankers excluded editor Dram momentum despite speculation on the currency

Bankers ruled yesterday that the Jordanian Central Bank UAE to liberalize the exchange rate of the national currency, despite the registration currency market speculation strong Dram amid increasing speculation imminent implementation of this step with the direction the Federal Reserve to reduce interest rates this month. He told «Middle East» Jean Christophe turnover, the Regional Director in the Gulf region for the Bank «BNP Paribas» French «when people start talking about this change in the currency exchange rate must exist momentum in this direction».
He said at a meeting in Dubai that the dollar weak, the more inflationary pressures but moving currency exchange rates «is a political decision ultimately». The turnover that postponing plans to launch the Gulf common currency is «resolution Saeb», adding that «this part of the world are well integrated with the world economy and two-thirds of reserves (cash) is one of the same coin». The central banks in the Gulf states, agreed last Saturday to develop individual policies for dealing with inflation increasing, but did not decide any change to the policy of linking the dollar currencies. Increased exchange rate Dram Emirates yesterday to its highest level since June 26 (July) because of past activities of speculators in the currency as record demand for the dollar exchange rate 3.6718 dirhams. The market expects that reduces the American reserve interest rates during its meeting scheduled next Tuesday, and any reduction of the interest that puts pressure on the most central banks since the Gulf do the same, which would increase inflationary pressures on their economies, which are suffering from high levels of inflation. For his part, told «Middle East» on Shihabi CEO of the investment bank capitalization in Dubai «I do not believe that the devaluation of the benefits to the economy, but the consequences would be extremely complicated». He said in a dialogue via telephone «should not rush things to address the short-term problem such as inflation». The economic stability enjoyed by the UAE and the countries in the region could be affected if the floating currency rates. The governor Sultan Nasser Swedish UAE Central Bank abstained last Saturday when asked to comment on the price change was studying the measurement of UAE dirhams. The fixed exchange rate Dram at 3.67275 against the dollar since November (November) 1997, with record inflation in the Emirates, 9.3% in 2006 result of the decline in the dollar exchange rate basically. He pledged the central bank in the UAE inappropriate, to continue linking the currency to the United States dollar commitment to the Gulf leaders to maintain the linked exchange rate fixed at the dollar.

Headed Emirates to convert part of the dollar reserves to the euro since last year when he said that the Central Bank intends to transfer 10% of these reserves to euros. In the Emirates started to rise in the cost of living since the banner year 2003 with the start of the march retreat dollar exchange rate against the euro reflected on the cost of imports to the United Arab Emirates.

The prices of some consumer goods imported specifically considerably. Also indicate the movement of the various components within the consumer price index to external influence on prices in the UAE.

Economists say that the devaluation of the dollar mean, in fact, a similar decline in the purchasing value of oil revenues in Gulf set up or converted to other global currencies. In their opinion, that oil revenues accounted for the bulk of government revenues in the Gulf region and the purchasing value of this revenue depends on the chances of the American currency on the basis of which are pricing crude oil sales. My residents of the Gulf citizens and foreigners alike impact on the American currency lower living costs, which rose rapidly record for the past four years or Thursday. According to bankers that inflation rates in most countries in the region recorded unprecedented levels affected mainly high housing prices and real estate prices, high dollar-denominated imports. But Gulf states are linking their currencies to the dollar to help stabilize the export earnings.