Gulf Arab oil exporters such as the UAE mainly invest in
dollar assets since most peg their currencies to the US dollar and crude oil,
priced in dollars, provides most of their budget revenue.
But the UAE central bank said in July, when the risk of a
US debt default was unsettling markets, that it did not hold any US Treasuries
and that most of its foreign reserves, though denominated in dollars, were
invested in non-US assets.
On Tuesday, central bank Gov. Sultan Nasser Al-Suweidi
told a news conference marking the UAE's national day that purchases of
Treasuries had resumed.
"Now, we do (invest in US Treasuries) because the
circumstances have changed. The interest rates are now reasonable," he
said. "It (the volume of investment) is fluctuating depending on what the
yield is," he told reporters, but did not give details.
The 10-year Treasury yield hit a record low of 1.72
percent in September and has since rebounded to around 2.0 percent.
The central bank's foreign currency assets edged down to
a three-month low of 199.1 billion dirhams ($54.2 billion) in June. But within
that total, holdings of foreign securities rose to 86 billion dirhams in June,
the highest level since at least 2007, the latest available data show.
Asked whether the UAE was considering imitating Austria's
central bank, which this month signed a deal with China allowing it to invest
in Chinese local-currency assets, Saif Hadef Al-Shamsi, senior executive
director at the UAE central bank's Treasury Department, said: "Having more
places to invest in is always good. "But the channel is closed. When it is
open I can address your question," he told Reuters on the sidelines of the
news conference.
EURO CRISIS
European leaders and the European Central Bank have not
asked the UAE, one of the world's top five oil exporters, for help in
containing the euro zone debt crisis, Al-Suweidi also said.
Euro zone finance ministers are expected to agree on
Tuesday on reforms of their bailout fund, the 440 billion euro European
Financial Stability Facility, to expand its effective size through leverage.
The EFSF will be able to attract cash from private and public investors to its
co-investment funds.
European officials have raised the possibility of China
and other cash-rich countries around the world investing, as a way to fight the
crisis. But asked whether the UAE had been approached on this issue, Al-Suweidi
said: "No, not at all."
"The Europeans need to organize themselves and they
will solve their problems. These problems are of a sovereign debt nature
and...can be handled over time, they need time," he said.
The central bank said in October it had no exposure to
euro zone debt in its reserves and that it only invests in countries and
corporates rated AAA, as required by law.
LENDING
Al-Suweidi also said the UAE's bank lending growth rate
of 4 percent since the beginning of the year was "good" under current
circumstances.
Asked whether he saw any signs of foreign banks scaling
down their activities in the UAE, given the headwinds they face in Europe, he
said: "Even if they scale down their operations they are free to do so.
They will scale down and then return."
The UAE has not felt any direct impact from the euro zone
debt crisis so far, said Mohamed Omar Abdulla, undersecretary at Abu Dhabi's
Department of Economic Development.
Asked if the debt troubles of Greece were a good
opportunity to invest there, he said: "We are discussing (with the Greek
Embassy) how we can explore the possibility of investing in Greece at this time.
We have a team working on this."
