Tuesday, Nov 29, 2011
--UAE Central Bank has made no preparations for possible euro zone breakup
--Says exposure to euro zone debt problems is limited
--Central bank has started buying U.S. treasuries again as rates are reasonable
By Leila Hatoum and Nour Malas
Of ZAWYA DOW JONES
(Adds detail on Europe in paragraph 6, comments on Syria in last paragraph.)
ABU DHABI (Zawya Dow Jones)--The United Arab Emirates has taken no steps yet to prepare for a possible breakup of the euro zone as it has limited exposure to the region's debt problems, while the central bank has started buying U.S. treasuries again as rates are now reasonable, the U.A.E.'s top banker said Tuesday.
"If there is no problem (with U.A.E. exposure) why should we take any measures?," Sultan Al Suweidi, the U.A.E. central bank governor, told reporters in Abu Dhabi.
Al Suweidi's comments come as a number of international banks, governments and other key players in the global financial system whose officials are worried enough about the stability of the common currency are thought to be making contingency plans for a possible euro zone split.
He added that he remains confident that the euro zone will overcome its sovereign debt crisis.
"I am very confident Europe will get over the difficulties," he said. The U.A.E. remains fairly safe from the financial turmoil in Europe as the "banking and business relation with the euro zone is limited," said Al Suweidi.
Asked how he saw the impact of the eurzone crisis on the European and U.S. financial sectors, he said the main issue was access to liquidity and "Western regulators are handling this issue."
Al Suweidi said the central bank is investing again in U.S. treasuries, describing current rates as "reasonable". The U.A.E., the Gulf region's second largest economy, said in August it held no U.S. treasury bills in its reserves, or any other U.S. government financial instruments.
"The circumstances change and therefore we change our decision," Al Suweidi said Tuesday.
When asked if the central bank was re-investing largely in treasuries, Suweidi told Zawya Dow Jones: "It's not how it was before." He added purchases "fluctuate" and "depend on the yield".
Separately, Al Suweidi said the U.A.E continues to work with the international community concerning the implementation of sanctions on Iran and is awaiting further guidance on the latest set of measures.
"We work with the U.S. authorities and deal with the issue from the time to time. We work with the Europeans too," Al Suweidi said, adding that the U.A.E. mainly takes its lead from the United Nations.
The U.S. and the European Union have threatened additional measures against Iran over its suspect nuclear activities and said it must address international concerns. The U.K., Canada and the U.S. slapped sanctions last week on Iran's financial, petrochemical and energy sectors, and the European Union is expected to follow suit after the bloc's foreign ministers meet Thursday.
On sanctions passed by the Arab League on Syria, the U.A.E. central bank chief said they hadn't yet received guidance from the league, or the U.A.E. government, on going ahead with implementation.
-By Leila Hatoum and Nour Malas, Dow Jones Newswires, +97150 2890223; nour.malas@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
29-11-11 1013GMT
