The dirham's peg to the dollar is currently “hurting” the UAE’s economy in terms of competition with other parts of the region, according to Emirates NBD group CEO Shayne Nelson.
Speaking at the Financial Times’ Global Financial Forum in Dubai on Monday, Nelson said that the UAE is “basically now a dollarised economy”.
“We have a pegged currency and we’re following US interest rates,” he said. “That’s fine if your economy is in sync with the US. But we’re not…our wages are in dollars and we’re competing against a lot of countries around the region that have depreciating currencies against the dollar and therefore the dirham."
While Nelson said he does not believe that the UAE should de-peg the dirham from the dollar, he said added that the effect of the strong dollar flows through the economy when it comes to competition.
“Even if property prices remain stable, if you’re an Indian they’ve gone up ten percent,” he said, referring to the devaluation of the Indian rupee. “We are seeing Dubai as a place at the moment that feels expensive for tourists and investors.”
While Nelson said he believes that in the medium-term this period will correct itself, he added that UAE’s currency is “hurting us”.
“I think we’re in a situation where the economy has been hurt from the strength of the dollar, which means we have a lot of competition issues in Dubai itself,” he said.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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