The UAE’s Central Bank has denied media reports that the country is studying the feasibility of continuing the peg between the dirham and the US dollar, official news agency WAM reported.
Mubarak Rashid Khamis Al Mansouri, governor of the UAE Central Bank, stressed in a statement that “fixing and safeguarding the official exchange rate of the dirham falls by law within the purview of the Central Bank’s board of directors, and that the policy of the fixed peg of the dirham against the US dollar will remain in place.”
The statement also said that national economic indicators strongly supported the continuation of the fixed peg regime and that it has contributed to maintaining economic stability and bolstering investors’ confidence.
Late last week, Ali Eissa al-Nuaimi, rapporteur of an economic committee of the Federal National Council, told Reuters that the committee had recommended that the central bank establish a department to oversee the peg.
“We suggested a study on the dirham-dollar peg, whether it is worthwhile to continue with the peg or delink it, or to think of any other alternative if that is better.”
Nuaimi also stressed that the committee was not pushing for the peg to be abolished, but only for its benefits to be examined regularly and added that the government would discuss the recommendation in detail early next year.
All the GCC countries, excluding Kuwait, have their currencies pegged to the US dollar. The UAE dirham has been fixed at a rate of 3.6725 to $1 since 1997. The Kuwaiti dinar is pegged to basket of currencies, after scrapping its dollar peg in 2007.