foolish_mortal

Hello

I noticed there were some discussions of bank accounts in this forum...

I want to open a savings account in UAE Dirhams, but I can't find any with decent interest rates. Does anyone know why this is and is there anything you can recommend?

I am not a resident of the UAE and I live in the UK at the moment, so something that can be opened from abroad would be best. The amount being saved would be on the order of 100,000 AED, and I need to be able to make regular payments out of it (I'm paying for a flat, in installments).

Thanks

Nathan

IndieG

You will find that interest rates on Dirham denominated accounts have fallen across the board. The AED exchange rate and interest rates are artificially low since thr Dirham is pegged to the not so mighty USD.

Yesterday when checking the Dirham deposit rates, I found that the bigger banks were paying around 1.6% for 30 day deposits - so savings a/c rates would be even lower.

Deposit rates are so low that I haven't bothered opening any deposits in the last 3 months

admon

Maybe easier just to open a $ account with your bank in the Uk and use it to transfer the correct amount when the installments are due.

IndieG

I wouldn't advice that for the following reasons:

1. The amount he will pay for the monthly transfers from UK - i.e. UK bank charges, the correspondent bank charges (if his bank in the UK does not have a branch in Dubai), the local bank's charges will be quite a bit. Not
to mention the headache of trying to trace a transfer that has not yet reached the beneficiary's account.

2. Notwithstanding what the recent "committee" has advised Sheikh Mo against revaluing the UAE Dirham, I personally feel this will happen once things have quietened down a bit (July-Aug maybe). A revaluation would benefit Dubai (for one, it will bring down construction costs - otherwise many projects launched and sold several years ago at much lower prices will incur huge losses). Buying Dirhams now may be a good idea - not that it would make a big difference to the OP - the amount is very small..

I think it would be easier to simply open a local AED account and set up a monthly standing order. The amount you'd earn/lose in interest is not really significant - hopefully th OP had made a lot of money on his property investment

foolish_mortal

Yeah like you say I want it in Dirhams because I'm afraid they might revalue the Dirham.

Have they not always been this low then, it's just a recent phenomenom due to the dollar's weakness? I wondered if it was because of Islamic law or something.

admon

The dollar is currently pegged to the dirham at a standard rate, so with the dollar weakening, the dirham slides on an exactly equal scale.

Revaluation will mean a sronger dirham - less dirhams to the dollar, or more dollars to the dirham, whichever way you want to look at it.

IndieG

And you're buying property in Dubai

admon

I'm not one to avoid stating the obvious, but 'Foolish Mortal' by name, 'Foolish Mortal' by nature, perhaps...
Maybe he/she is right and will reap the rewards of ownership for decades to come.

admon

Just adding something to the mire..
A solid arguement against revaluation is that it will make property more expensive to buyers from overseas, a market the UAE is growing increasingly dependent on.

With a half decent villa at dhs4m now (£550k give or take a bit), revaluation makes the dhs conversion price an even more unattractive proposition.

IndieG

Not really, think Dubai is more worried about the massive losses that the existing projects will incur if they have to go ahead - no doubt there.

I expect a lot of labour unrest if salaries are not increased soon as food prices (especially rice, wheat etc) are expected to go through the roof in the coming weeks.

admon

I understand your arguement and the inflationary pressures the weak $ has pver here, but is it really at that point, where the margins are low to the point of existing projects potentially losing money?

I always assumed the margins the developers were working on (even on 2005 figures) were monstrous. Obviously not, if they are willing to sacrifice potential overseas investment on new developments in order to satisfy lower import costs.

IndieG

Oh yes, it is. Unless of course they all concoct a "force majeure" and cancel the project by invoking the clause - a la Damac style. Not to mention the huge amount of profit they stand to make if they cancel a project.

It's all about greed and a lack of scruples - developers seem to get away with anything here.

admon

The force majeure style would destroy the international reputation that Dubai is trying to build, so I suppose that is not an option - particularly for the Government owned developers.

Norm_uk

You're not in the UAE but want to save in Dirhams?

How about a US Dollar account with one of the major offshore banks...the Dollar is pegged to the dirham...and you'll get the protection of major offshore banks. There is absolutely no consumer protection in the UAE.

I can recommend offshore banks if you PM me...but would not recommend any UAE bank for what you are doing - most wouldn't deal with you anyways as you are not a resident.

admon

Admog wrote...
Maybe easier just to open a $ account with your bank in the Uk and use it to transfer the correct amount when the installments are due.

So I was sort of right in the first place Thanks Norm.