Monday, 16 June 2008

UAE currency speculation (dirham)

Currency speculation is back - even though the UAE is doing its best to appease US policymakers. UAE inflation is, however, running higher than the last published figure of 9.3%. Speculators have been buying UAE Dirhams like crazy. Deposits are still being converted from other Gulf curencies and dollars into dirhams. These inequalities just can't last.

The UAE's central bank Governor went gone on the record saying that they would consider a revaluation of their currency, preferably in a joint move with the other GCC states, but that they would act on their own if the other states don't come into an agreement with them.
Local dirham bonds are the favoured way to play the possibility of a revaluation. These inlude: Dubai Government AED 6.5 bil, Ras Al Khaima Government AED 1 bil, Jebel Ali Free Zone (JAFZA) AED 7.5 bil, Dubai Water and Electricity Authority (DEWA) AED 3.2 bil, Emirates NBD Bank AED 2.1 bil, HSBC AED 2.25 bil, Emirates Airlines AED 1.8 bil (traded on DFM as EK-2013), Nakheel AED 3.6 bil, and Aldar Properties AED 3.75 bil.

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