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UAE doubts union deadline
A top UAE official yesterday cast doubts on the full implementation of the GCC Monetary Union by 2010.
- By Gaurav Ghose, Staff Reporter
- Published: 00:00 December 18, 2006
Abu Dhabi: A top UAE official yesterday cast doubts on the full implementation of the GCC Monetary Union by 2010.
The GCC's plan for a unified monetary union will be realised by the planned date, but may be in a simpler form than originally envisaged, the UAE's central bank governor said yesterday.
The establishment of a GCC central bank may, however, be delayed, Governor Sultan Nasser Al Suwaidi told reporters.
Review
"The whole monetary union is now being looked at," Al Suwaidi said. "One form or another of monetary union will be in place by 2010. May be a new version of the monetary union will not require establishing a common central bank so quickly." He, however, did not clarify if the union will have a single currency by then. Oman last week said it will not join the union by 2010.
Al Suwaidi said that Oman's stated position does not necessarily mean it is opposed to a monetary union. "I think they [Oman] are only falling out from the more comprehensive form of monetary union....Comprehensive is really getting everything unified - one central bank, no national central banks, one currency, no national currencies - all of which is under review. They [Oman] could change, maybe they will look at the form of monetary union and then will join," he said.
"We have to review it and agree on a monetary union version which will be practical," Al Suwaidi said. "We have not yet agreed on what form it will take."
In recent times, questions have been raised about the wisdom of following a fixed exchange rate policy pegged to the US dollar, which has been weakening. All the GCC countries, including the UAE, follow the peg.
But Al Suwaidi brushed aside concerns about the dirham's fixed exchange against the greenback.
Exports
About 80 per cent of the UAE's imports are denominated in either US dollars or currencies pegged to the dollar, Al Suwaidi said. "The euro area represents only 20 per cent of UAE imports, which could be purely denominated in a non-US dollar currency."
"On the other hand, about 70 per cent of our exports are priced in US dollars, that is our oil and gas exports," he said.
The central bank governor added it might be a while before the central bank went for converting part of the country's dollar reserves into euros or any other currency.
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