Central Bank assets fall 32%

The Central Bank said its assets declined by 32 per cent last year to Dh193.7 billion (US$52.7bn), down from Dh285.9 billion the year before.

Although the Bank did not provide a breakdown of its assets, analysts said the drop was largely the result of selling foreign assets to repay speculators who had bet on the revaluation of the dirham. When it became clear that the dirham would remain pegged to the dollar, speculators demanded the return of their foreign currency from the domestic banking system, which forced the Central Bank to liquidate its foreign currency holdings.

The Central Bank’s foreign assets declined from Dh286bn at the end of 2007, to Dh163bn in August of last year, according to the International Monetary Fund.
The Bank’s net profit rose by 1.4 per cent to Dh3.83bn last year, compared to Dh3.77bn the year before. The Central Bank has several mechanisms for making a profit, including returns on its domestic and foreign investments. The bank also profits from printing money, since the face value of the banknotes and coins is considerably greater than the cost of producing them.