UAE continued economic growth for this tax haven?

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Currency update for AED

The recent weakness in the US economy has cause the AED to lose value against most major currencies in the 2nd half of 2013. As the AED is pegged to the USD, it has suffered along with the US currency, as employment data has been mixed and the rate of recovery in the US economy has fallen behind other major nations.

So what now for the United Arab Emirate Dirham (AED)?

This is a pivotal week for the Federal Reserve and the USD/AED because the level of expectation of an improvement in the unemployment rate will determine the amount of pressure on the central bank to make changes to their monetary policy at their next meeting. Non-farm payrolls are not scheduled for release until Friday. Between now and then, the dollar will take its cue from other labour market indicators that will help set expectations for payrolls.

The USD/AED has gained some ground over the last few weeks, because of a stronger dollar being caused a ‘flight to quality’ caused by the turmoil in emerging markets, with the movements of the dollar being affected by developments in Turkey, Argentina, South Africa and Russia. A rebound in non-farm payrolls on Friday is widely expected but investors are keeping a very close eye on the unemployment rate, which is nearing the Federal Reserve's 6.5% threshold.

Over the past 2 months the U.S. jobless rate has fallen rapidly and if it maintains its current pace of improvement, it could drop to 6.5% this week. This possibility has led many people to wonder what the central bank will say or do if their threshold is reached on Friday. We don't expect much response from the Fed because they have been downplaying the significance of the threshold for months now. In fact, the Fed Presidents who are scheduled to speak this week will probably take the opportunity to stress that 6.5% is a threshold and not a trigger for a rate hike, which could dampen any rallies in the USD/AED.

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UAE continued economic growth for this tax haven?

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