The total balance of foreign currency deposits in banks operating in the UAE increased by Dh95.8 billion, reflecting a growth of 21 percent over the past year.
By the end of May 2024, foreign currency deposits reached Dh552.2 billion, compared to Dh456.4 billion at the end of May 2023, according to data issued by the Central Bank of the UAE (CBUAE).
The data indicated that the rise in foreign currency deposits coincided with a significant increase in deposits in UAE dirhams, which grew by Dh131.3 billion during the same period.
This represents a 22 percent growth, bringing the total to Dh728.8 billion by the end of May 2024, up from Dh597.5 billion by the end of May 2023.
The increase in foreign currency deposits is a key indicator of the strong confidence in the national currency and the stability of the UAE’s monetary policy.
Additionally, it reflects the growing value of foreign direct investment in the country, whether in alternative investment sectors or in stock and commodity markets.
The data also revealed that the significant rise in foreign currency deposits was driven by the inflow of liquidity and foreign investments into the local market.
This was coupled with substantial growth in the value of the UAE’s foreign trade, which exceeded Dh4.45 trillion in 2023.
According to the World Foreign Direct Investment Report 2024, issued by the United Nations Conference on Trade and Development (UNCTAD), foreign direct investment (FDI) in the UAE amounted to $30.7 billion (approximately Dh112.6 billion) in 2023, up from $22.74 billion (around Dh83.5 billion) in 2022.
This represents a growth rate of about 35 percent, placing the UAE second globally in incoming FDI inflows in 2023.
The substantial increase in foreign currency deposits in UAE banks is a strong indicator of the growing confidence of investors and customers in the UAE banking sector, as well as the strength and stability of the national economy.
Data from the CBUAE also revealed that private domestic liquidity increased by Dh226 billion, equivalent to a growth of 21.5 percent over the year, reaching Dh1.28 trillion by the end of May 2024, compared to Dh1.054 trillion at the end of May 2023.
Total liquidity in the local market also rose by Dh357 billion, reflecting a 15.7 percent growth during the same comparison period, bringing the total to Dh2.63 trillion by the end of May 2024, up from Dh2.273 trillion by the end of May 2023.
ALETIHAD
