Peg against dollar led to remarkable growth: UAE

Abu Dhabi: Prevailing interest rates in the UAE, subject to the peg of the dirham to the US dollar, has helped achieve remarkable econ-omic growth, according to an official.

"This peg was useful and resulted in remarkable economic growth rates. The problem is that sometimes conditions are driven by the demand for oil, or expenditure by the governments, which are elements beyond our control," Sultan Bin Nasser Al Suwaidi, governor of the UAE Central Bank, told Gulf News yesterday.

The peg with the greenback, which is a common policy among Gulf Cooperation Council (GCC) member countries, came under strong scrutiny recently due to the differences of inflation rates between the US and the GCC on the one hand, and among the GCC countries on the other. Some countries such as the UAE and Qatar are suffering from double-digit price increases.

"The pegging to the US dollar comes in line with the general policy of the government which includes cooperation and coordination with other GCC countries," he added.

The Central Bank, which issued Dh21 billion worth of certificates of deposit (CDs), denied that such development affected the liquidity in the stock markets.

"We are rather acting upon the market conditions and the demand therein, and the Central Bank will always be ready and prepared to meet such demand, and we are always ready to take away liquidity whenever banks are ready to give it to us," Al Suwaidi said.