De value of the Dirham
 

I have been reading a few reports that quite a few of the money experts are betting on a de value of the Dirham and Saudi Riyal. It's probably not a good time to keep any Dirhams if you are planning to covert to your home currency. They predicted that Kazakhstan would do it and they de valued 25 percent against the dollar...

De value of the Dirham
 

My maid told me that she heard from the Pakistani gardener that he had heard from one of his friends that the UAE is going to scrap the currency in total and go back to bartering, using sea shells.

Saywhat,

I can't stop laughing.. :O:O:O

It's a very real possibility but will never be talked about in the press here.
Chart of the week: Kazakh currency collapses - MoneyWeek

I asked Mondial about this. They said relax, it's not going to happen. 3.673 remains
So...back to work

Maybe they devalue...maybe they don't.

But no country EVER telegraphs a currency change when they are pegged, or, if they have intervened to keep their currency within a range. They don't do so because the speculators step in and make their job even more difficult.

So the gov't here will ALWAYS claim that there will be no changes.

I'll play it safe and keep my money in US dollars (or other currency) since there is NO risk. If I hold US dollars and the peg holds then nothing changes. If they change the peg or go floating I am not at risk either. If I hold dirhams I am at risk.

Therefore, the obvious choice should be to hold in US dollars (or other).

Agreed
 

I agree with Trader for what it's worth only sensible really. See the recent turmoil with Ch Franc vs Euro .. No indication ( at least to the likes of us ) whatsoever .. € down20 %
Overnight ...!

Had an interesting chat with a colleague over brunch yesterday regarding Dubai, the Dirham and ME in general.

The last 3 weeks has seen a large outflow of money from Dubai bank accounts, mainly due to uncertainty and volatility within the World markets. It's mostly panic and sentiment driven but this sell off has created a lack of cash flow which, as any treasurer will tell you, is a serious concern for markets. The banks need the transactions to keep the money moving around and several of the main banks are genuinely worried that if this trend continues, we're heading for another crash. We're already starting to see a glut of property on the market, not helped by concerns over a devaluing market and restrictions on borrowing imposed by the central bank. You only need to see all the latest glossy property releases to see that the stuff is not selling, even with only 30% payments required before completion. 10 years ago, the stuff was flying off the shelf with 90% paid before handover! Dirty Russian money is already here and the devalue of their currency has effected tourism and further investment.The drop in oil revenue is compounding the downturn and he says that the next year or so will be crucial in whether Dubai grows or sinks. Current analysis, in his personal opinion, is the latter. The press, however, are highly unlikely to publish any concerns as it would only drive an unstable and vulnerable market towards the self fulfilling prophecy.

Whatever happens however, the dirham will still remain pegged to the dollar. That, he says, is a definite. VAT will slowly be brought in along with other means of generating income such as small increases in Salik, public transport, airport tax, DEWA bills (expats only).

Maybe that time again to consider Gold or a great buying opportunity for equities and property?

Harry

"the dirham will still remain pegged to the dollar"


But at what rate? 3.68 is at the whim of the UAE central bank. IMHO, it depends mostly on the Saudis. If they are unable to defend the Riyal peg against the traders who make bets otherwise it will come under the greatest pressure. With oil at $40 there are far less USD flowing in while many Riyals are going out on social welfare and the situation in Yemen. If the Saudis devalue other GCC countries will likely soon follow.


By no means a certainty but something to factor into your financial planning.

Given that this is cloud cuckoo land, it will probably be revalued at 1:1.

Nothing in the UAE, and Dubai in particular, has any grounding in reality or common sense.:ugh: