Business | Markets

Central banks should take concrete steps

The global financial crisis has not even spared the Gulf Cooperation Council (GCC). In a matter of four trading days this month, Dubai Financial Market and Abu Dhabi Indices fell by 25 per cent and 19.7 per cent respectively.

  • By P. Krishna Murthy, Special to Gulf News
  • Published: 00:31 October 9, 2008
  • Gulf News

Dubai: The global financial crisis has not even spared the Gulf Cooperation Council (GCC). In a matter of four trading days this month, Dubai Financial Market and Abu Dhabi Indices fell by 25 per cent and 19.7 per cent respectively.

There is no other reason for the downslide, except for the exit of foreign investors from regional markets, who have their own problems back home.

However, there are definite signs of moderation in GCC capital and money markets following recent increases in interbank rates. The GCC situation is quite different from that of the West, and yet given the globalisation factor, it will experience some challenges.

At times like this, when the liquidity squeeze is hurting the country's economy, it is for the regional central banks to intervene to maintain liquidity in banking sector. Kuwait has taken the initiative to reduce rates as well as ask Kuwait Investment Authority to have deposits with local banks. Similar move by other regional central banks will be helpful in preventing further deterioration in the system, created by external factors.

Largely, the GCC should cope well with the current situation and manage to notch up decent growth in the medium to long term. But timely actions by the government and central banks are essential for the short-term problems.

The writer is the CEO of Dubai International Capital.

  • Rate this article
  • Average reader rating (0 votes) 0 Stars
Tools

Emailing an article to friend is a simple way to share a news item. Your friend will receive an email with your name and email address as well any personal message you choose to send.

The information you provide on this page will not be used to send unsolicited emails.

This service is not intended to encourage spam, and action may be taken against individuals who maliciously enter personal details of another individual.

Share this article

More from Markets

  1. UAE stock markets gain

  2. Middle East stocks likely to remain range-bound

  3. DME pioneers Middle East crude benchmark

  4. Dubai joins big league of global financial hubs

All articles in Markets

More from Business

Gulf News
Popular in Business
Precious jump
General

Precious jump

Gold prices at new high as India's central bank buys $6.7b worth of gold

Business Editor's choice