UAE Central Bank says US Treasuries 'unattractive'

UAE prefers to use dollar-based instruments as deposits rather than low-yielding US Treasuries to manage foreign reserves; Sultan Nasser Al Suwaidi announced and also said that he expected the UAE economy to grow by up to 4 percent this year, driven by the tourism and trading sectors. US Treasuries are no more attractive as there is growing concern about it globally and is rising as US politicians try to reach a deal to raise the debt limit and avoid a potential default on the country's $14.3 trillion debt by August 2. Asked how much in US Treasuries the UAE Central Bank held as part of its reserves, Al Suwaidi replied, “Not much." "US Treasuries have two problems. The rate is very low and if you want to sell, you have to sell at a large discount. It's liquid, but for liquidity you have to pay a price.” ‘The UAE Central Bank holds nearly all its foreign reserves, around $33bn, in US dollars with no Euros on its balance sheet’, Mohamed al-Tamimi, Deputy Executive Director at the Central Bank's treasury department said earlier. According to Al Suwaidi, "You have many instruments you can put your money into. In reality some instruments are equal to US Treasuries, in practice, like deposits. The largest exposure is to US dollars, but to be in US dollars you don't have to hold US Treasuries."