Thank you, UAE, for the dirham's peg with the dollar

Thank you, UAE, for the dirhams peg with the dollar

Dh1 in June 2005 fetched less than Rs12, which has now gone up to Rs19.70.

By Vicky Kapur (From the Executive Editor's desk)

Published: Tue 3 Sep 2019, 8:00 PM

Last updated: Wed 4 Sep 2019, 6:16 PM

Call me selfish, but every time there is some news of Indian bourses tanking by a few hundred points or a lower-than-expected GDP data for my home country, the first thing that I (and I suspect a lot of expats) do is to check the prevailing UAE dirham-Indian rupee exchange rate. No, it isn't that I have surplus funds parked with me in a dirham-denominated bank account that I'm looking to remit once the rate is favourable enough (I wish). It's just a habit, a kind of extraneous exercise that I have come to indulge in since I moved to the UAE some 14-odd years ago.
If memory serves me well, Dh1 at that time (June 2005) fetched less than Rs12, which has now gone up to Rs19.70 (the dirham hit an all-time high of 20.24 vis-à-vis the rupee in October last year). So, in rupee terms, my income (assuming it remained static in dirham terms) has gone up by 66 per cent. Considering the escalating cost of living thanks to two school-going kids, which means that I remit only a fraction of my UAE earnings, keeping track of the exchange rate is a mere feel-good effort but one that I religiously follow. Not just the Indian rupee, but the decline in currencies will be the case with most Asian countries - the source market of a majority of UAE expats. In fact, the Sri Lankan rupee has declined by 80 per cent and the Pakistani rupee has tumbled by 162 per cent during the same period.
This, obviously, has been possible thanks to the UAE dirham's fixed peg to the US dollar, which has remained steadfast at
$1=Dh3.6725 since 1997. There have been several occasions in the past when a section of economists and financial experts have voiced their disagreements with this policy given that the US and UAE economies may not have necessarily moved in tandem at all times, but the UAE Central Bank has never allowed that exchange rate to waver. The fixed US dollar peg has served the UAE well, and the stability and confidence that it has afforded investors and residents far outweigh the disadvantages. Thank you, UAE, for that stability.

More news from OPINION