From 2001 to 2004, as the USD slid against most major currencies, the United Arab Emirates (UAE) considered diversifying its foreign exchange reserves into alternative currencies. While the USD’s strong performance in 2005 has relieved the UAE of the sense of urgency it had been feeling, the decision must still be made in the not-too-distant future. In total, the regions that comprise the UAE control over $23 Billion in foreign exchange reserves. While similar countries concentrate their reserves in a Central Bank , the reserves of the UAE are spread over numerous banks and investment agencies, in the form of cash, tradable securities, and private investments, which would significantly inhibit diversification. The Khaleej Times reports:

UAE central bank foreign reserves are held virtually entirely in dollars, but an official said in July the bank was looking to convert five percent of its holdings into euros.

Read More: UAE still weighing option to diversify forex reserves