Fri,Sep 20,2013
The chairman of the United Arab Emirates (UAE) banking federation on Thursday welcomed the U.S. Federal Reserves' (Fed) decision not to reduce monetary easing as yet, although the breathing space would be short.
Speaking to Xinhua on the sidelines of the global financial summit Sibos, held for the first time in the Middle East, Abdulaziz Al Ghurair said "I think it (the withdrawal) is good as long as we can afford it, but eventually this will stop."
Ben Bernanke, chairman of the Fed, said late Wednesday that the Fed would continue to buy bonds worth 85 billion U.S. dollars per month, because the economic recovery in the world's biggest economy had to be more sustainable.
Most analysts had been anticipating a tapering of the stimulus scheme by 10 billion U.S. dollars per month, which would signal that the interest rates might rise soon.
The currency of the UAE, the Dirham, is pegged to the U.S. dollar at a fixed rate of 3.667 to one. Therefore, any decision on monetary policy by the United States has a direct impact on the interest rates in the UAE.
The U.S. interest rates are near zero while the UAE benchmark overnight purchase rate stands at 1 percent.
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