Dubai: UAE banks and money exchange houses turned cautious on their dollar exposures yesterday due to the uncertainty surrounding the future of the dirham's peg to the dollar.
On Sunday Kuwait abandoned its currency's peg to the dollar in favour of an undisclosed basket of currencies resulting in sudden appreciation of the dinar.
Although the UAE Central Bank is yet to make a formal announcement, there has been strong speculation in banking circles on the future of the dirham-dollar peg.
Anticipating an appreciation of the dirham against the dollar, some banks in the country advised their branches yesterday not to commit any exchange rate involving large future transactions.
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"Please do not quote dollar-buying rates against the dirham for any large transaction amounting to the equivalent of Dh1 million and above today or make any commitments for future transactions," said a treasury advisory issued by a bank.
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