Foreign banks reduced their deposits in the UAE by nearly Dh40bn in the first half of 2010 to push them to their lowest level in nearly four years and reverse a massive inflow of speculative money, according to recent official data.
From around Dh93bn at the end of 2009, their deposits with the UAE ’s 51 banks dropped to nearly Dh53bn at the end of June, say figures published in the Central Bank’s semi-annual report.
Deposits by foreign banks touched an all-time high of nearly Dh211bn at the end of April 2008 at the height of speculation that the UAE and other Gulf oil producers would appreciate their currencies against the US dollar.
Speculation began to recede after the UAE Central Bank repeatedly ruled out such plans and came almost to a standstill last year after the Emirates decided to withdraw from the monetary union launched by Saudi Arabia, Kuwait, Qatar and Bahrain. The other GCC member, Oman, also pulled out in late 2007.