Homework Writing Help on Currency Crisis

Currency Crisis

Currency crisis refers to the event in which there is uncertainty in the country’s central bank’s ability to maintain its fixed exchange rate. United Arab Emirates (UAE) is a Middle East country found in the Asian continent. The country first experienced a financial crisis in 2008 when the entire globe had a recession. The situation has revisited the country in the recent years where the oil prices have collapsed. According to Hassan, one third of UAE’s GDP is attributed to oil and the non-oil sector is facing a sluggish growth that cannot sustain the economy (48). The fluctuating oil prices are presenting an unpleasant situation to the UAE economy. Similarly, the country’s political-economic structure is to blame for the financial crisis. Hassan notes that most of the Middle East countries are run by personal-decisions other than a collective one (49). Hill defines this structure as theocratic law system which is based on religious teachings where they concentrate on morality. Therefore, the business sector is affected adversely.

There are various effects of United Arab Emirates’ currency crisis. Aldin and Pillai define the liquidity ratios as the calculations that explain the company’s ability to repay short-term debts while current ratio is obtained by dividing current assets with the liabilities (120).The median current ratio fell from 1.405 to 1.264 affecting companies’ liquidity. The real estate has not been left out where the profitable ratios have fallen tremendously. Financial institutions are forced to raise their lending interests hindering investments especially in real estates. They are trying to acquire finances to write off their accrued debts. Finally, the financial crisis has resulted to high cost of living in the country. Therefore, people result to spending rather than saving or investing.

Works cited

Aldin, Hal-Malkawi and Pillai, Rekha.The Impact of Financial Crisis On UAE Real Estate And Construction Sector: Analysis And Implications. Humanomics. (2013) 29(2): 115-135

Hasan, Zubair. Dubai Financial Crisis: Causes, Bailout and After – A Case Study. Journal of Islamic Banking and Finance. (2009). 47-55

Hill, Charles. International Business: Competing In the Global Marketplace. (2009). McGraw-Hill