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Official: UAE to maintain dollar-peg policy Xinhua
A top financial official of the United Arab Emirates (UAE) will maintain its current policy to peg its currency dirham to U.S. dollar and will not revise the dirham-dollar exchange rate, local newspaper Gulf News reported on Tuesday. "We have no intention whatsoever to depart from the peg or to revalue the currency in any manner," said Sultan Bin Nasser Al Suwaidi, governor of the UAE Central Bank. "Looking into history, the dollar has been appreciating for about ten years from 1992 to 2002, and we maintained the peg throughout, and now it has been depreciating since 2004 for only about three and a half years, and it can rise again," he added. A study by the UAE Central Bank on the relationship between the money supply and inflation over the past 25 years showed that "the correlation is very weak indeed, where we had periods of increasing liquidity and contracting inflation rates, and vice versa," he said.
"Hence we will not change our policies according to short-term currency fluctuations," Suwaidi stressed. Governors of central banks of the Gulf Cooperation Council (GCC) agreed in Doha Sunday to maintain the peg to dollar and to continue striving toward the GCC common currency by Oct. 20, 2010.
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