GCC likely to stand by US dollar



The US dollar may have had a bad 12 months last year but Gulf investors do not have many alternatives amid global currency turbulence.

The greenback slid 2.5 per cent last year against other currencies but analysts say this year the euro may be the next victim if the European sovereign debt crisis worsens.

The retention of currency pegs to the dollar will also mean it makes sense for the Gulf to leave oil revenues in dollars. But other countries may increasingly diversify their foreign assets next year.

"There will not be an actual sell-down of the dollar but we will see countries looking to diversify out of the dollar into new reserves," said Shady Shaher, the MENA region economist at Standard Chartered.

"For the GCC, many reserves will still remain in dollars."

Global debate about the dollar's status as a reserve currency has intensified after a tough year for the currency.

Last year's drop in the dollar came after a 10 per cent decline in 2009, according to the Bloomberg Correlation-Weighted Indexes, which tracks the dollar against a basket of international currencies.

Dollar weakness has serious implications. Nearly two thirds of global reserves, including much of the GCC's oil revenues, are denominated in dollars.

Longer-term, economists predict moves away from the dollar as US dominance of the world economy wanes. China has already bought Japanese bonds and indicated a willingness to purchase Greek debt.

"2011 will not be a dramatic shift from the dollar but there will be some elements evident," said Fabio Scacciavillani, the director of macroeconomics and statistics at the Dubai International Financial Centre Authority.

However, experts are more upbeat about the fortunes of the dollar against other major currencies this year.

A strengthening US economy is forecast to outflank Europe and Japan, attracting investors to the dollar. In contrast, concern is rising that the euro may be weighed down if the euro-zone members Portugal and Spain eventually require bailouts.

Likewise, analysts expect the yen to weaken this year because of a sluggish Japanese economy and a large public debt.

The yuan is anticipated to rise to help control inflation in China after a dispute last year with the US over its value.

But the yuan is still not considered a viable alternative to the dollar as a reserve currency. China and other rising powers are not yet seen as ready to absorb the US$9 trillion (Dh33.05tn) of reserve assets held around the worl.

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Tightening the screw on rogue recruiters

The UAE overhauled the procedure to recruit housemaids and domestic workers with a law in 2017 to protect low-income labour from being exploited.

 Only recruitment companies authorised by the government are permitted as part of Tadbeer, a network of labour ministry-regulated centres.

A contract must be drawn up for domestic workers, the wages and job offer clearly stating the nature of work.

The contract stating the wages, work entailed and accommodation must be sent to the employee in their home country before they depart for the UAE.

The contract will be signed by the employer and employee when the domestic worker arrives in the UAE.

Only recruitment agencies registered with the ministry can undertake recruitment and employment applications for domestic workers.

Penalties for illegal recruitment in the UAE include fines of up to Dh100,000 and imprisonment

But agents not authorised by the government sidestep the law by illegally getting women into the country on visit visas.

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Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.

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