The US Fed will be normalising monetary policy in 2018, reversing the loose, unconventional policies it has pursued since the onset of the financial crisis 10 years ago. This means rising interest rates and monetary tightening.
The UAE and other GCC countries (with the exception of Kuwait), whose currencies are pegged to the US dollar, will therefore have to follow suit and raise domestic interest rates, their monetary policy driven by the Fed's actions rather than their own needs. Higher interest rates mean the cost of borrowing (on debt, loans, credit facilities and so on) for government, businesses, households and consumers will become more expensive.
Tighter monetary conditions will also result in lower spending and investment. This will dampen economic activity and growth prospects in the UAE, and elsewhere around the region, exacerbating the negative effects of fiscal austerity, recently imposed taxes (VAT and excise duties), geopolitical risks and uncertainty.
US monetary policy, which is geared to the needs of the US business cycle, is not suitable for the economies of the UAE and GCC, which are facing a period of lower growth. The current mix of monetary tightening and fiscal austerity is pro-cyclical, and directly conflicts with the need for GCC countries to conduct a counter-cyclical policy, including monetary loosening and lower interest rates, together with structural reforms in order to adjust to the "new oil normal" of lower prices.
The peg to the US dollar in the past provided an anchor for local currencies, imposed monetary discipline and led to moderate inflation rates. However, it is no longer appropriate for maintaining macroeconomic stability and addressing the GCC's economic development and diversification objectives to transition away from oil-based economies.
A new exchange rate regime
Economic analysis and country experience suggests that exchange rate flexibility is appropriate to address real domestic or external shocks (for example, terms of trade fluctuations) or foreign nominal shocks (foreign inflation shocks), whereas fixed exchange rates are more effective in achieving macroeconomic and financial stability in reaction to domestic nominal shocks.
The strict dollar peg is counter-productive and is no longer the appropriate exchange rate regime for the UAE and other countries in the region for two major reasons. Firstly, a flexible exchange rate regime is required for adjustment to address the real economic shock of the new oil normal, which imply a deterioration in the terms of trade and lower real incomes. Secondly, the peg does not reflect the deep structural changes in the GCC's economic, trade and investment patterns and financial links since the 1980s and the growing shift to the east, to Asia and China (see table).
Greater exchange rate flexibility across the GCC is required to maintain international competitiveness of the region's expanding non-oil sector, whether it is tourism, or industry. GCC states need a more independent exchange rate regime linked to dealing with the business cycle conditions of their main trade and investment partners, which are now the Asian countries and no longer the US and Europe. Other oil exporting countries, such as Russia, have allowed their exchange rates to depreciate, easing adjustment to lower oil prices by contrast to the GCC countries which maintained fixed rates.
Moving to a currency basket
Many options are available in moving from a tight US dollar peg to greater exchange rate flexibility. Pegging to a currency basket allows for some monetary policy independence and exchange rates that respond to macroeconomic shocks. Adopting a currency basket with a band (movements of 5 per cent on either side of a central rate) would provide exchange rate flexibility and enable central banks to deduce a monetary policy that is aimed at regional macroeconomic and financial stability.
Macroeconomic volatility can result from trade shocks and technological disruptions, as well as inflation, oil and non-oil output (business cycle) shocks. For internationally financially integrated economies, financial shocks can also lead to macro volatility. An optimally designed currency basket should take account of the trade, inflation, output and financial linkages between the GCC and its major partners.
_______________
Read more:
Why the GCC should adopt the petroyuan
Why the UAE should institute an investor residency programme
Corruption must not destroy the future for the Arab world
_______________
Based on this analysis, the GCC (individual or common) currency baskets should include the dollar, the euro, and Asian currencies such as yuan, given China's status as the region's top trade partner. The individual currency weights in the basket can be adjusted over time to reflect structural changes in trade, output, inflation and financial linkages.
Given the region's dependence on oil exports, an oil-price augmented currency basket would also be an option. For example, including oil prices with a weight of 10 to 15 per cent in the basket would automatically allow adjustment in terms of trade shocks and real shocks, and imply a depreciation (or appreciation) of GCC currencies given a decline (or rise) in oil prices.
The chart above shows a simulation for a UAE currency basket without and with (more fluctuations) the oil price. The UAE dirham would have depreciated since 2014, smoothing adjustment to the oil price shock, and favouring the growing non-oil sector, notably tourism and services industries.
There are some important caveats for introducing a currency basket-based exchange rate mechanism. Policy sequencing is particularly important. Exchange rate regime change should be preceded by fiscal reforms (revenue diversification, targeted subsidies) for fiscal sustainability, and to anchor exchange rate expectations. Similarly, monetary policy independence requires policy tools for market intervention to accompany greater exchange rate flexibility. The GCC region needs to develop broad, deep and liquid local currency money markets and government debt markets to provide instruments for the conduct of monetary policy and exchange rate market interventions.
As the UAE and GCC economies mature, they require an arsenal of economic policy tools to diversify their economies, for macroeconomic stabilisation, economic diversification and fiscal development. Currency basket-based exchange rate mechanisms would certainly be a step in the right direction.
Nasser Saidi is the former chief economist of DIFC and has served as Lebanon’s minister of economy
UAE currency: the story behind the money in your pockets
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
%3Cp%3EThe%20Department%20of%20Culture%20and%20Tourism%20-%20Abu%20Dhabi%E2%80%99s%20Arabic%20Language%20Centre%20will%20mark%20International%20Women%E2%80%99s%20Day%20at%20the%20Bologna%20Children's%20Book%20Fair%20with%20the%20Abu%20Dhabi%20Translation%20Conference.%20Prolific%20Emirati%20author%20Noora%20Al%20Shammari%2C%20who%20has%20written%20eight%20books%20that%20%20feature%20in%20the%20Ministry%20of%20Education's%20curriculum%2C%20will%20appear%20in%20a%20session%20on%20Wednesday%20to%20discuss%20the%20challenges%20women%20face%20in%20getting%20their%20works%20translated.%3C%2Fp%3E%0A
Ticket prices
General admission Dh295 (under-three free)
Buy a four-person Family & Friends ticket and pay for only three tickets, so the fourth family member is free
Buy tickets at: wbworldabudhabi.com/en/tickets
AUSTRALIA SQUAD
Aaron Finch, Matt Renshaw, Brendan Doggett, Michael Neser, Usman Khawaja, Shaun Marsh, Mitchell Marsh, Tim Paine (captain), Travis Head, Marnus Labuschagne, Nathan Lyon, Jon Holland, Ashton Agar, Mitchell Starc, Peter Siddle
What can you do?
Document everything immediately; including dates, times, locations and witnesses
Seek professional advice from a legal expert
You can report an incident to HR or an immediate supervisor
You can use the Ministry of Human Resources and Emiratisation’s dedicated hotline
In criminal cases, you can contact the police for additional support
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
Cricket World Cup League 2
UAE squad
Rahul Chopra (captain), Aayan Afzal Khan, Ali Naseer, Aryansh Sharma, Basil Hameed, Dhruv Parashar, Junaid Siddique, Muhammad Farooq, Muhammad Jawadullah, Muhammad Waseem, Omid Rahman, Rahul Bhatia, Tanish Suri, Vishnu Sukumaran, Vriitya Aravind
Fixtures
Friday, November 1 – Oman v UAE
Sunday, November 3 – UAE v Netherlands
Thursday, November 7 – UAE v Oman
Saturday, November 9 – Netherlands v UAE
UAE currency: the story behind the money in your pockets
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
ANDROID%20VERSION%20NAMES%2C%20IN%20ORDER
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
The Transfiguration
Director: Michael O’Shea
Starring: Eric Ruffin, Chloe Levine
Three stars
Padmaavat
Director: Sanjay Leela Bhansali
Starring: Ranveer Singh, Deepika Padukone, Shahid Kapoor, Jim Sarbh
3.5/5
The specs
Engine: 2.4-litre 4-cylinder
Transmission: CVT auto
Power: 181bhp
Torque: 244Nm
Price: Dh122,900
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
COMPANY%20PROFILE
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Killing of Qassem Suleimani
The view from The National
Volvo ES90 Specs
Engine: Electric single motor (96kW), twin motor (106kW) and twin motor performance (106kW)
Power: 333hp, 449hp, 680hp
Torque: 480Nm, 670Nm, 870Nm
On sale: Later in 2025 or early 2026, depending on region
Price: Exact regional pricing TBA
Generation Start-up: Awok company profile
Started: 2013
Founder: Ulugbek Yuldashev
Sector: e-commerce
Size: 600 plus
Stage: still in talks with VCs
Principal Investors: self-financed by founder
Christopher Robin
Starring: Ewan McGregor, Haley Atwell, Jim Cummings, Peter Capaldi
Three stars
Profile
Company name: Jaib
Started: January 2018
Co-founders: Fouad Jeryes and Sinan Taifour
Based: Jordan
Sector: FinTech
Total transactions: over $800,000 since January, 2018
Investors in Jaib's mother company Alpha Apps: Aramex and 500 Startups
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Company%20Profile
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'THE WORST THING YOU CAN EAT'
Trans fat is typically found in fried and baked goods, but you may be consuming more than you think.
Powdered coffee creamer, microwave popcorn and virtually anything processed with a crust is likely to contain it, as this guide from Mayo Clinic outlines:
Baked goods - Most cakes, cookies, pie crusts and crackers contain shortening, which is usually made from partially hydrogenated vegetable oil. Ready-made frosting is another source of trans fat.
Snacks - Potato, corn and tortilla chips often contain trans fat. And while popcorn can be a healthy snack, many types of packaged or microwave popcorn use trans fat to help cook or flavour the popcorn.
Fried food - Foods that require deep frying — french fries, doughnuts and fried chicken — can contain trans fat from the oil used in the cooking process.
Refrigerator dough - Products such as canned biscuits and cinnamon rolls often contain trans fat, as do frozen pizza crusts.
Creamer and margarine - Nondairy coffee creamer and stick margarines also may contain partially hydrogenated vegetable oils.
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 National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Visit Abu Dhabi culinary team's top Emirati restaurants in Abu Dhabi
Yadoo’s House Restaurant & Cafe
For the karak and Yoodo's house platter with includes eggs, balaleet, khamir and chebab bread.
Golden Dallah
For the cappuccino, luqaimat and aseeda.
Al Mrzab Restaurant
For the shrimp murabian and Kuwaiti options including Kuwaiti machboos with kebab and spicy sauce.
Al Derwaza
For the fish hubul, regag bread, biryani and special seafood soup.
Teenage%20Mutant%20Ninja%20Turtles%3A%20Shredder's%20Revenge
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Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
Stan%20Lee
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CHATGPT%20ENTERPRISE%20FEATURES
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RESULTS
Bantamweight:
Zia Mashwani (PAK) bt Chris Corton (PHI)
Super lightweight:
Flavio Serafin (BRA) bt Mohammad Al Khatib (JOR)
Super lightweight:
Dwight Brooks (USA) bt Alex Nacfur (BRA)
Bantamweight:
Tariq Ismail (CAN) bt Jalal Al Daaja (JOR)
Featherweight:
Abdullatip Magomedov (RUS) bt Sulaiman Al Modhyan (KUW)
Middleweight:
Mohammad Fakhreddine (LEB) bt Christofer Silva (BRA)
Middleweight:
Rustam Chsiev (RUS) bt Tarek Suleiman (SYR)
Welterweight:
Khamzat Chimaev (SWE) bt Mzwandile Hlongwa (RSA)
Lightweight:
Alex Martinez (CAN) bt Anas Siraj Mounir (MAR)
Welterweight:
Jarrah Al Selawi (JOR) bt Abdoul Abdouraguimov (FRA)
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
Warn others to prevent further harm
Courtesy: Crystal Intelligence