The UAE made the right choice in keeping its dirham pegged to the ailing US dollar and it fully expects the greenback to recover this year, the head of a state-controlled investment firm said in remarks published on Wednesday.“We had good days with the dollar and were happy. I think the decline of the dollar will not continue and it will recover within six months,” said Khaldoon Al-Mubarak, chief executive of Mubadala Development Company, an Abu Dhabi investment vehicle that manages over $10 billion in assets.
His comments were published in UAE daily Emirates Business 24/7.
Pressure on the UAE and most of its Gulf neighbours to revalue their currencies mounted as the dollar tumbled to record lows against the euro this year, driving up import costs, and the states tracked six US interest rate cuts since September.
UAE Prime Minister Sheikh Mohammed bin Rashid Al-Maktoum dampened speculation that the oil producer might reform its currency policy when he accepted a committee’s proposal this month to maintain the dirham’s dollar link at the same rate.
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Mubadala is one of the agencies Abu Dhabi and other members of the UAE federation use to invest their windfall from a five-fold increase in oil prices since 2002.
In comments to another UAE daily on Wednesday, Al-Mubarak said the UAE is outlining a strategy to tackle near-record inflation and would announce measures in the coming weeks.
“The impact of inflation is a major challenge facing the economy and the government is giving priority to tackling the situation,” he told Khaleej Times.
“The rise in cost of doing business has emerged as a serious issue and what I can assure you is that the matter is being studied and deliberated upon by the federal government,” he said.
The Ministry of Economy has been trying to control food price inflation, for instance, by having various supermarket chains fix the prices of basic food items.
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Inflation in the second-largest Arab economy hit a 19-year peak of 9.3% in 2006 and probably accelerated to 10.9% last year, according to an estimate by the National Bank of Abu Dhabi. (Reuters)
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