The UAE central bank reserves fell to just under $35 billion at the end of November (the most recent available data.) That represents a decline of about $6 billion in the month of November and an average decline of $5 billion a month since July. The reduction in UAE central bank reserves came significantly before the central bank agreed to buy $10 billion of bonds issued by Dubai last week and even before it stepped up dollar/dirham swaps in December in its effort to provide new liquidity to the banks.
The UAE isn’t the only central bank in the region reporting a decline in reserve holdings. Qatar’s reserves have fallen by a third from March to December 2008 and Oman’s slightly less. (see above). But the UAE does account for most of the change in the GCC reserves (excluding Saudi Arabia whose central bank has a large stock of nonreserve assets). Ex Saudi Arabia, GCC central bank reserves almost halved from March to December 2008, falling from $125 billion to around $70 billion. Just as it registered the sharpest increase in reserves in 2007 and early 2008 when GCC revaluation bets were in vogue, the UAE has witnessed the sharpest outflows. UAE reserves are now almost 2/3 lower than they were at the peak in February.
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