The United Arab Emirates is benefiting from the strong U.S. dollar, and the UAE dirham’s peg to the dollar has been very helpful to the economy, central bank chief Mubarak al-Mansouri said on Monday.
“The strong dollar helps the UAE. We have benefited a lot from the link to the dollar,” Mansouri said at a business conference.
He was speaking after a senior Qatari central bank official, Director of Research and Monetary Policy Khalid Alkhater, said last month that Gulf Arab economies should rethink their monetary policies and the long-term sustainability of their dollar pegs.
Mansouri made clear that the UAE’s peg was here to stay. Asked whether dollar strength might hurt the UAE’s export competitiveness because of the peg, he said: “We export to neighbour countries whose currencies are linked to the dollar.”
He also noted that most of the UAE’s investments were dollar-denominated.
On the plunge in oil prices, Mansouri said: “It will afffect us but we have the financial capacity, SWFs (sovereign wealth funds) and our banks are liquid, have high capita adequacy ratios and are in a very good position today.”