Dubai: UAE Central Bank Governor Sultan Bin Nasser Al Suwaidi has ruled out any knock-on effects of the Eurozone financial crisis on the UAE economy.
"European leaders and the European Central Bank have not asked the UAE for financial aid to solve the Eurozone debt crisis," Al Suwaidi said.
"And our trade and econ-omic activities with the Eurozone do not form more than 20 per cent of our trade activities."
Eurozone finance ministers were yesterday expected to agree on reforms of their bailout fund, the €440 billion (Dh2.1 trillion) European Financial Stability Facility, to expand its effective size through leverage.
The EFSF will be able to attract cash from private and public investors to its co-investment funds.
European officials have raised the possibility of China and other cash-rich countries around the world investing as a way to fight the crisis. But asked whether the UAE had been approached on this issue, Al Suwaidi said: "No, not at all."
He said the euro was a strong currency and added that "the Europeans have to organise themselves and their efforts to solve their problems which are of a sovereign debt nature. This crisis needs time to be handled."
As for the GCC common currency, Al Suwaidi pointed out that the currency issue would have to wait until all other matters are settled.
"The currency should come in the end after we finish discussions about our economic integration which should be achieved," the Central Bank chief said.
Ziyyad Dabbas, NBAD adviser for local markets, told Gulf News that the UAE's decision to continue pegging its currency to the dollar was a wise move since most of the raw materials are priced in dollars and most of the world's transactions are in the US currency.
Exchange rate: Greenback peg to stay
The UAE is committed to keeping its currency pegged to the US dollar, according to UAE Central Bank governor Sultan Bin Nasser Al Suwaidi.
The exchange rate of the dirham is linked to the greenback. But some analysts have questioned the policy. "We will keep pegging our dirham to the US dollar because we reaped many benefits in the past from this in spite of the ups and downs in the market," he said.
Asked about the sanctions against Syria and Iran, Al Suwaidi said the Central Bank will comply if ordered to by the UAE government but has not yet received guidance.
