Font Size

- Aa +

Tue 11 Dec 2007 07:16 PM

Font Size

- Aa +

UAE central bank governor denies he is to quit

Al-Suwaidi says report is 'totally incorrect, baseless and without any merit'.

The UAE’s central bank governor on Tuesday denied a report he may quit over pressure on the Gulf Arab state to drop its currency’s peg to the tumbling US dollar.

“This story is totally incorrect, baseless and without any merit whatsoever,” Sultan Nasser Al-Suwaidi told state news agency Wam.

A report earlier on Tuesday claimed the governor could step down as early as December 18, the first day of the Eid Al Adha holiday, citing unnamed officials at the bank.

Al-Suwaidi is “unhappy” with internal politics at the bank, sources said.

Abu Dhabi Commercial Bank chairman Saeed Mubarak Rashid Al Hajeri has reportedly been lined up as Al Suwaidi’s successor.

Al-Suwaidi is facing mounting pressure to revalue the dirham against the dollar or ditch the UAE currency’s dollar peg altogether to better control soaring inflation, which hit a 19-year high 9.3% last year.

UAE companies on Sunday called for a shift in monetary policy, claiming the tumbling value of the dollar is beginning hit business.

"The dirham must be depegged immediately," Khalaf Al-Habtoor, chairman of conglomerate Al-Habtoor Group, was quoted as saying. "The implications of the dollar peg have really begun to affect business and markets."

Al-Suweidi said last month he was under growing pressure from "companies and communities" to drop the peg and track a currency basket to contain inflation.

However, following this month’s GCC summit in Doha the governor said he saw no reason to change currency policy "for the foreseeable future".

GCC leaders at the summit made no mention of a change in monetary policy or the dollar’s weakness.

The mixed messages coming from Al-Suweidi have only added to speculation that the UAE is poised to shift its monetary policy.

The dirham hit a 17-year high last month after remarks by the governor raised expectations of an imminent policy shift.