Wednesday, December 12, 2007

Central bank governor denies reports

Dow Jones Newswire
United Arab Emirates Central Bank Governor Sultan bin Nasser Al Suwaidi may step down amid continuing pressure for the Gulf state to drop its dollar peg, according to people familiar with the matter.

Officials at the central bank, who declined to be identified, told Zawya Dow Jones that a change could happen as early as Dec. 18, with Saeed Mubarak Rashid Al Hajeri, current chairman of Abu Dhabi Commercial Bank tipped to take over.

The governor's office didn't respond immediately to questions from Zawya Dow Jones about whether Mr. Al Suwaidi will be stepping down.

With inflation in the U.A.E. expected to exceed 10% this year Al Suwaidi, a veteran at the central bank, has come under increasing pressure to abandon the country's currency peg with the U.S. greenback that has lasted since 1973.

The U.A.E. dirham is fixed at a rate of 3.67 to the dollar and like other Gulf Cooperation Council countries the central bank has closely copied U.S. Federal Reserve decisions to cut interest rates.

News of Suwaidi's possible departure comes on the same day that the U.S. Fed is expected to cut interest rates for a third straight time to deal with a prolonged housing slump and tight credit markets.
Gulf News
United Arab Emirates Central Bank Governor Sultan Bin Nasser Al Suwaidi denied a Dow Jones report that he was planning to step down as early as December 18, the news agency WAM reported on Tuesday.

"This report is absolutely not true, it is baseless and worthless," Suwaidi said, according to WAM.



Anonymous abbass said...

Have high government officials ever 'stepped down' in this part of the world?

Sure, in Kuwait, ministers have 'resigned' but that's only to avoid or stop the intense, embarrassingly personal, verbal abuse they face in the 'nation's council or parliament' --or whatever they call it--of that faux pseudo democracy.

Yes, a pseudo democracy can still be faux. just look at Kuwait!

Regarding Dollar -Dirham peg and the UAE Central Bank governor:

Sure the people concerned in the UAE probably aren't US or Euroland central banker calibre, but hey, what do the rest of us know about such issues?

People seem to forget that UAE foreign trade is massively dollar denominated. So Suwaidi has a point.

The core issue is the interest rate differential and the massive speculation (thanks to foreign banks and institutions) in the AED increasing in value.. That speculation is causing many bubbles over here.

I see the UAE stock markets are back in vogue the past couple of months.

10:01 PM  

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