Font Size

- Aa +

Wed 6 Jan 2010 01:00 PM

Font Size

- Aa +

UAE cenbank chief says dollar peg to stay

UPDATE 1: Governor also says UAE economy will see some growth this year.

The UAE will keep its currency pegged to the US dollar, the country’s Central Bank governor Sultan Bin Nasser Al-Suwaidi said on Wednesday.

“We are pegged to the dollar, so we will be pegged to the interest rate, too,” he said, indicating that the Gulf nation won’t raise interest rates before the US does.

The UAE will stay out of a plan to establish a single currency for the Arab nations of the Persian Gulf, he said.

The country pulled out of the project in May because its request to host the common central bank was rejected in favor of the Saudi Arabian capital, Riyadh. Oman isn’t taking part in the project either.

Four countries are participating in the single currency plan - Saudi Arabia, Kuwait, Qatar and Bahrain.

The UAE's economy, the second largest in the Arab world, will expand this year, he added. “It’s not going to be big growth, in high rates, but there will be growth,” he said.

The World Bank in an October report predicted that the UAE economy will expand 3.3 percent this year, after growing 0.3 percent in 2009 and 7.4 percent in 2008.

“Inflation will be very low” next year, said al-Suwaidi.

He also said the central bank was still discussing a plan to provide government guarantees for bonds sold by local banks, he told reporters in Sharjah.