Dubai: While government deposits are on a decline amid the oil slump, UAE residents continue to build their wealth, with the amount of private fortunes held in banks growing by several millions of dirhams recently.
As of September 2016, the numbers on UAE residents’ accounts ballooned to Dh1,321.8 billion, up by 3.4 per cent compared to a year earlier, according to the data provided by the National Bank of Abu Dhabi (NBAD).
The latest data released by the UAE Central Bank, which compares figures between August 2016 and September 2016, also showed total bank deposits increased by Dh30.2 billion, partly due to the increase in residents’ accounts, which expanded by Dh11.4 billion.
A huge chunk of the residents’ money is held in time and savings deposits in dirhams and foreign currencies, which grew by Dh17.1 billion. Government deposits, on the other hand, dropped by Dh4.8 billion.
The UAE is also increasingly attracting cash from people based overseas, with the amount of non-resident deposits growing by Dh18.8 billion. According to NBAD, non-resident deposits reached Dh186.9 billion, up by 17.92 per cent year-on-year.
Some sources said a significant portion of the money held by non-resident foreigners originated from India and Europe.
Preeti Bhambri, founder of personal finance site MoneyCamel.com, said the UAE is becoming an attractive offshore haven for Indian nationals because the UAE dirham provides a “hedge against” the weak rupee.
“Interest rates are much higher in India, but the major attraction for Indian money is that deposits in UAE are pegged to the US dollar. A dollar peg gives investors a hedge against a falling Indian rupee and the flexibility to move money to other dollar-based currencies,” Bhambri told Gulf News.
According to Alp Eke, senior economist at NBAD, the ratio of non-resident deposits has been increasing, but it’s still at 12.4 per cent. “Government deposits have been declining and the gap is being filled by non-resident deposits. That is something desirable,” Eke said.