The UAE won’t bow to investors betting low oil prices will force it to drop its currency peg this year, a Bloomberg survey of Dubai-based currency professionals shows.
The survey, conducted on May 26, showed 86 percent believe the UAE’s dirham will remain pegged to the dollar in 2016, with 41 percent saying it would “definitely not” be broken.
The timing of the Federal Reserve’s interest-rate increases was the biggest concern among the fifty foreign-exchange traders, strategists, and corporate treasurers who were polled.
Currency fixings in the GCC have been the subject of increasing speculation after the drop in oil prices over the past two years slashed revenue for governments highly dependent on crude exports.
Some investors are betting it may become too expensive to maintain the pegs as the GCC battles to plug fiscal shortfalls the International Monetary Fund says will total almost $900 billion through 2021.
UAE Central Bank Governor Mubarak Rashed Al-Mansoori reiterated his country’s commitment to the dollar peg in a recent interview.
Source : Arab News