This month, the UAE Central Bank followed the US Federal Reserve by cutting interest rates for a second time, following a reduction in September. The aim of the move is to further support the economy by boosting spending and lending. The UAE banking regulator had similarly followed the US central bank by raising rates from March 2022 to curb soaring inflation.
But why does the UAE’s monetary policy mirror that of the US? For that we go back 27 years to November 1997 when the UAE officially pegged its currency at 3.6725 dirhams to the US dollar. The dirham, established on May 19, 1973, almost two years after the UAE itself was founded, was reflective of the many emirates that came together under one flag.
A currency peg is aimed at stabilising the exchange rate between countries to support trade and reduce risk. Along with the UAE, most other Gulf countries, including Saudi Arabia, Bahrain, Qatar and Oman have also pegged their currencies to the US dollar.
“The UAE’s decision to peg the dirham to the US dollar in 1997 has brought clear benefits to the country, especially given its dependence on oil exports priced in dollars,” explains Damian Hitchen, chief executive of Asia Pacific and Middle East and North Africa at Saxo Bank.
The peg has enabled exchange rate stability, which is critical for mitigating commodity price volatility and ensuring steady revenue from exports, he says. “It has also fostered an environment of investor confidence and economic predictability, making the UAE a reliable destination for international investors. These benefits reassure us of the soundness of the peg.”
Despite the advantages, the peg means that when the dollar has faced pressure, it can also affect the UAE’s domestic monetary policy decisions.
Over the years, there have been several reports about the UAE looking at the possibility of moving its peg from the dollar to a basket of currencies, similar to Kuwait, to reduce risks. But the country’s Central Bank has reiterated that it remains confident about the dollar peg.
“The national economic indicators strongly support the continuation of the fixed peg regime. This exchange rate policy has contributed to maintaining economic stability and bolstering investors’ confidence over the long period it has been in effect,” the Central Bank said in 2014.
According to Hitchen, the peg does limit the UAE's monetary flexibility, aligning its policy closely with the US, “which may not always be optimal for local economic conditions”.
“While the peg is expected to stay in place for the foreseeable future, there have been discussions around diversifying the currency basket for non-oil trade,” he adds. “Given the UAE's economic structure and trade composition, these could shape the policy in the long term, but the dollar peg remains for now.”
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Ferrari 12Cilindri specs
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COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
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Cricket World Cup League Two
Oman, UAE, Namibia
Al Amerat, Muscat
Results
Oman beat UAE by five wickets
UAE beat Namibia by eight runs
Fixtures
Wednesday January 8 –Oman v Namibia
Thursday January 9 – Oman v UAE
Saturday January 11 – UAE v Namibia
Sunday January 12 – Oman v Namibia
Killing of Qassem Suleimani
Mohammed bin Zayed Majlis
Farage on Muslim Brotherhood
Nigel Farage told Reform's annual conference that the party will proscribe the Muslim Brotherhood if he becomes Prime Minister.
"We will stop dangerous organisations with links to terrorism operating in our country," he said. "Quite why we've been so gutless about this – both Labour and Conservative – I don't know.
“All across the Middle East, countries have banned and proscribed the Muslim Brotherhood as a dangerous organisation. We will do the very same.”
It is 10 years since a ground-breaking report into the Muslim Brotherhood by Sir John Jenkins.
Among the former diplomat's findings was an assessment that “the use of extreme violence in the pursuit of the perfect Islamic society” has “never been institutionally disowned” by the movement.
The prime minister at the time, David Cameron, who commissioned the report, said membership or association with the Muslim Brotherhood was a "possible indicator of extremism" but it would not be banned.
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
Killing of Qassem Suleimani
RESULTS
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The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
The five pillars of Islam
The Kingfisher Secret
Anonymous, Penguin Books
Evacuations to France hit by controversy
- Over 500 Gazans have been evacuated to France since November 2023
- Evacuations were paused after a student already in France posted anti-Semitic content and was subsequently expelled to Qatar
- The Foreign Ministry launched a review to determine how authorities failed to detect the posts before her entry
- Artists and researchers fall under a programme called Pause that began in 2017
- It has benefited more than 700 people from 44 countries, including Syria, Turkey, Iran, and Sudan
- Since the start of the Gaza war, it has also included 45 Gazan beneficiaries
- Unlike students, they are allowed to bring their families to France
Killing of Qassem Suleimani
Closing the loophole on sugary drinks
As The National reported last year, non-fizzy sugared drinks were not covered when the original tax was introduced in 2017. Sports drinks sold in supermarkets were found to contain, on average, 20 grams of sugar per 500ml bottle.
The non-fizzy drink AriZona Iced Tea contains 65 grams of sugar – about 16 teaspoons – per 680ml can. The average can costs about Dh6, which would rise to Dh9.
Drinks such as Starbucks Bottled Mocha Frappuccino contain 31g of sugar in 270ml, while Nescafe Mocha in a can contains 15.6g of sugar in a 240ml can.
Flavoured water, long-life fruit juice concentrates, pre-packaged sweetened coffee drinks fall under the ‘sweetened drink’ category
Not taxed:
Freshly squeezed fruit juices, ground coffee beans, tea leaves and pre-prepared flavoured milkshakes do not come under the ‘sweetened drink’ band.
Saturday's results
Brighton 1-1 Leicester City
Everton 1-0 Cardiff City
Manchester United 0-0 Crystal Palace
Watford 0-3 Liverpool
West Ham United 0-4 Manchester City
Specs
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Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
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Tips to keep your car cool
- Place a sun reflector in your windshield when not driving
- Park in shaded or covered areas
- Add tint to windows
- Wrap your car to change the exterior colour
- Pick light interiors - choose colours such as beige and cream for seats and dashboard furniture
- Avoid leather interiors as these absorb more heat
The five pillars of Islam
Film: In Syria
Dir: Philippe Van Leeuw
Starring: Hiam Abbass, Diamand Bo Abboud, Mohsen Abbas and Juliette Navis
Verdict: Four stars
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
BORDERLANDS
Starring: Cate Blanchett, Kevin Hart, Jamie Lee Curtis
Director: Eli Roth
Rating: 0/5
UAE currency: the story behind the money in your pockets
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Specs
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Mohammed bin Zayed Majlis
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The specs
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