Hot money departs as Central Bank keeps peg

Almost all the speculative cash that flowed into the country in anticipation of a currency revaluation has now left.

More than 90 per cent of foreign deposits that had flowed in ahead of an expected currency revaluation had now left the country, the Central Bank of the UAE said today. The banks' board of directors met yesterday to discuss liquidity in the country's banking system, and had noted the outflow of offshore deposits. "The board instructed continuation of monitoring the situation closely, and was also assured that the Central Bank has the necessary tools to deal with the situation if so required," it said in a statement.

Towards the end of last year the country experienced a net inflow of foreign money as speculators bet on the local currency that the dirham, which is pegged to the dollar, would be revalued or even allowed to float freely. Once it became clear that the currency peg would be maintained, the flow of cash began to reverse. The bank did not say if the recent ATM fraud that had hit the country had been discussed. [e-mail]