Nearly all of $33bn fx reserves in dollars - UAE cbank

UAE keeps reserve profile in currencies low due to its dirham peg to the dollar.
Nearly all of $33bn fx reserves in dollars - UAE cbank
FOREIGN EXCHANGE: The UAE central bank said that it holds nearly all of its foreign exchange reserves, worth around $33bn, in US dollars. (Getty Images)
By Martin Dokoupil
Wed 02 Jun 2010 09:55 PM

The UAE central bank holds nearly all of its foreign exchange reserves, worth around $33 billion, in US dollars with no euros on its balance sheet, a senior central bank official told Reuters on Wednesday.

The UAE, the world's third largest oil exporter and home to one of the largest sovereign wealth funds, keeps its reserve profile in currencies aside from the greenback low due to its dirham peg to the US dollar.

Mohamed al Tamimi, deputy executive director at the central bank's treasury department, said: "Our foreign exchange reserves are around $33 billion. There is no plan to move out of the euro to the US dollar."

He added: "This is for the simple reason that we do not have euros to sell as our foreign exchange reserves are almost 100 percent in the US dollars. The central bank currently does not hold euros in its foreign exchange reserves."

Central banks in the Gulf, the world's top oil exporting region, usually do not disclose the composition of their foreign currency reserves.

A report by the Financial Times last week that China was reviewing its euro zone bond holdings because of growing concerns about large deficits in countries such as Greece and Portugal turned the global market focus to reserve management.

The euro hit a four year low of $1.2110 on Tuesday, but it recovered on Wednesday after government sources told Reuters some of the world's richest central banks would not stop investing in the currency.

Tamimi also said the UAE central bank currently holds foreign currencies such as the Japanese yen, but very small amounts with all exposure hedged, while the bank's total balance sheet was an equivalent to $55 billion.

He said: "Our foreign exchange reserves are fully hedged against foreign exchange risk."

He added: "Even when, from time to time, the central bank invests in other main currencies for the sake of geographical diversification and for minimising a credit risk, all these investments are fully hedged against foreign exchange risk."

The UAE central bank's foreign assets holdings stood at 78.3 billion dirhams ($21.33 billion) at the end of March, down from 89.9 billion at the end of 2009, its data showed. (Reuters)

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