St. LOUIS (ResourceInvestor.com) -- United Arab Emirates (UAE) Central Bank Governor Sultan Bin Nasser al-Suwaidi announced today that the UAE will switch 8% of its foreign-exchange reserves from U.S. dollars into euros before September. Now China, Russia, Italy Switzerland, Sweden, Qatar, New Zealand and UAE are all diversifying away from the dollar.
The U.A.E. has started already “in a limited way” to sell part of its dollar reserves, said al-Suwaidi. The total value of the UAE's current reserves is $24.9 billion, 98% in dollars and 2% in euros, meaning the diversification would amount to nearly $2 billion.
Jon Nadler, analyst for Kitco.com, told RI today that this implies that “financially savvy heads inside that financial crystal palace” have seen it fit to prevent future losses by jumping into a currency that has more to offer or less risk.
“Could it start a trend? The dollar's baby sitters sure hope not,” Nadler said.
In an e-mailed note, he called it “another ever-darkening shadow over the U.S. dollar and stimulated further demand for bullion in these closing days of the year.”
The dollar promptly fell to $1.3124 per euro in New York this morning from $1.3098 yesterday. The dollar has declined 9.7% versus the euro this year. In the meantime, gold has risen 22% for the year, closing today at $631.30/oz.
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