Escalating global currency wars risk hurting the UAE in the form of trade barriers against its airline and petrochemical industries, an adviser to the Central Bank has warned.
To avoid further turmoil, the IMF needed to be beefed up to police currency adjustments, says David Dodge, a former Canadian central bank governor.
Concern about trade barriers being erected was a "real issue," he said.
"Generally you don't get the trade barriers in the basic commodities but you sure get them in petrochemicals and airline protection so that's what we have to be really worried about," said Dr Dodge.
He is in the UAE to help advise officials from the Central Bank on policy ideas. Dr Dodge was appointed as one of four financial experts to the regulator's International Advisory Council last year.
Disputes over currency valuations preoccupied global policymakers from Brazil to China last year.
Evidence of a fresh redrawing of battle lines have emerged in recent days.
Brazil, Chile and Peru are taking action to stem rises in their currencies caused by destabilising inflows of capital. Investment is flowing to fast-growing emerging markets as US and European economies tread water.
Guido Mantega, Brazil's finance minister, warned earlier this week that events were building towards a world trade war.
Any measures to limit international trade would have significant implications for the Gulf, which relies on flows of global goods and on foreign buyers of its oil.
tarnold@thenational.ae
