Dubai Chamber urges UAE to revalue dirham by 15pc
Despite the government's categorical statement against currency revaluation, an official of the Dubai Chamber of Commerce and Industry has insisted that the UAE revalue the dirham by 15 per cent and move to a currency basket within two years.
Dr Eisa Abdelgalil, a senior economist at Dubai Chamber's Data Management and Research Department, cited the need for the government to tame inflation and the effects of a weak US dollar, to which the dirham is pegged at 3.67.
"According to our calculations, based on the drop of the dollar against the other major currencies, the dirham should be revalued by 15 per cent," he said.
He added that the UAE must act quickly to abandon the dollar-peg and move to a basket of currencies in a year before the deadline for the six Gulf Co-operation Council, or GCC, economies to create a single currency by 2010.
UAE Central Bank Governor Sultan bin Nasser Al Suwaidi put to rest last month all speculations, saying there was no plan to either revalue the dirham or abandon the dollar peg.
Abdelgalil addressed The Economic Seminar 2008 yesterday in which speakers highlighted the traders' expectations for this year, the need for businesses to embrace corporate social responsibility (CSR) and the factors driving inflation. Shaikh Abdullah bin Saud Al Thani, Governor of the Central Bank of Qatar, which holds the revolving chair of the GCC, said early this month that pressure on the Gulf economies via low interest rates and a weakening greenback have piled up.
Except for Kuwait, which abandoned the dollar in May, the GCC economies of Saudi Arabia, Bahrain, the UAE, Oman and Qatar have tracked the US interest rates cuts - done to ward off recession - despite having a five-fold growth in the last six years.
Abdelgalil said inflation in the UAE rose nine per cent in 2006 from two per cent in 2001, citing official data from the Ministry of Economy.
He added that the drivers of inflation include high rental fees, increasing wages, the influx of money supply, rising imports prices and currency depreciation.
Estimates by the NBAD put the country's inflation at a 19-year record of 9.3 per cent in 2006 and probably climbed to over 10.9 per cent last year. Other estimates have pointed out a 27-year high inflation of 8.7 per cent in Saudi Arabia, an 18-year record of 11.1 per cent in Oman and 13.7 in Qatar. Source
Dr Eisa Abdelgalil, a senior economist at Dubai Chamber's Data Management and Research Department, cited the need for the government to tame inflation and the effects of a weak US dollar, to which the dirham is pegged at 3.67.
"According to our calculations, based on the drop of the dollar against the other major currencies, the dirham should be revalued by 15 per cent," he said.
He added that the UAE must act quickly to abandon the dollar-peg and move to a basket of currencies in a year before the deadline for the six Gulf Co-operation Council, or GCC, economies to create a single currency by 2010.
UAE Central Bank Governor Sultan bin Nasser Al Suwaidi put to rest last month all speculations, saying there was no plan to either revalue the dirham or abandon the dollar peg.
Abdelgalil addressed The Economic Seminar 2008 yesterday in which speakers highlighted the traders' expectations for this year, the need for businesses to embrace corporate social responsibility (CSR) and the factors driving inflation. Shaikh Abdullah bin Saud Al Thani, Governor of the Central Bank of Qatar, which holds the revolving chair of the GCC, said early this month that pressure on the Gulf economies via low interest rates and a weakening greenback have piled up.
Except for Kuwait, which abandoned the dollar in May, the GCC economies of Saudi Arabia, Bahrain, the UAE, Oman and Qatar have tracked the US interest rates cuts - done to ward off recession - despite having a five-fold growth in the last six years.
Abdelgalil said inflation in the UAE rose nine per cent in 2006 from two per cent in 2001, citing official data from the Ministry of Economy.
He added that the drivers of inflation include high rental fees, increasing wages, the influx of money supply, rising imports prices and currency depreciation.
Estimates by the NBAD put the country's inflation at a 19-year record of 9.3 per cent in 2006 and probably climbed to over 10.9 per cent last year. Other estimates have pointed out a 27-year high inflation of 8.7 per cent in Saudi Arabia, an 18-year record of 11.1 per cent in Oman and 13.7 in Qatar. Source
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