UAE: linking currency and oil prices, inflation enhances
GMT 16:00:00 2008 Saturday, May 3
Reuters
DUBAI: The Emirati Minister of Economy said on Friday that linking the currency exchange rate and high oil prices mean that inflation but said it must deal more caution with exchange rates and other tools.
The UAE first country in the Arabian Gulf region follow the example of the seventh reduction in U.S. interest rates since September on Thursday. And linking the exchange rates of currencies of all the Gulf Arab states except Kuwait in U.S. dollars required States to emulate the Federal Reserve Board (CBE U.S.), although inflation in the economies and increase in recovery.
According to the statement of the Economy Ministry said Sultan bin Saeed Al Mansouri, Minister of Economy of United Arab Emirates in a conference in Beirut that the phenomenon of inflation is the result of an expected economic recovery in the region, but increasingly by other factors such as high world prices for foodstuff and currency exchange rates linked to U.S. dollar.
He added that the tools of monetary policy, exchange rates and financing options must be examined more carefully because it might cause a degree of economic distortions.
Mansouri said last month that meet the inflation target figure Emirates this year of five percent would be "a miracle".
The UAE has tried to curb inflation signing agreements with supermarket chains supermarkets to stabilize the prices of food commodities at levels 2007. The producers of oil in the Gulf to impose caps on rent and raise the salaries of public sector workers and supporting food commodity prices.
According to estimates from the National Bank of Abu Dhabi inflation reached its highest level in 19 years at 9.3 percent in 2006 and is likely that accelerated to 10.9 percent last year.
Mansouri said that some countries have chosen to resort to a basket of currencies and other nations are still assess the impact of revaluation.
He added that although there is no single remedy to the problem of inflation because each state has its economic power of the only specific actions we must take is the prudential supervision of trends in regional and global financial and act accordingly.
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