DUBAI: The UAE Central Bank’s foreign assets fell by $12 billion (Dh44.1 billion) in January from the previous month as the Arab world’s second-biggest economy grapples with falling oil prices and bets against its currency.
Foreign assets declined to Dh296.9 billion from Dh341.1 billion, according to data posted on the central bank’s website. Cash, bank balances and deposits with banks abroad dropped almost 30 per cent to Dh122.2 billion, while investments in held-to-maturity foreign securities and other foreign assets increased, according to the data.
Oil producers in the six-nation Gulf Cooperation Council are seeing their public finances deteriorate as crude prices hover near 12-year lows. Net foreign assets of the Saudi Arabian Monetary Agency, the kingdom’s central bank, have fallen in the 11 months to December as the country sought to bridge its budget deficit.
The drop in oil prices has also boosted speculation that countries in the region will be pushed to adjust their currencies’ fixed exchange rates to the dollar. Twelve-month forward contracts for the UAE dirham, used partly to bet on a devaluation of the currency, climbed to 325 points last month, their highest since 2009.
The UAE holds about 6 per cent of global crude reserves. Most of the country’s cash reserves are held by its sovereign wealth fund, the Abu Dhabi Investment Authority, whose assets Fitch estimated would decline to $475 billion at the end of this year.
