DUBAI, Sept 3: United Arab Emirates’ Central Bank said on Saturday it would decide later this month whether to convert some of its foreign exchange reserves into euros from dollars.

The Central Bank board of directors will review the US dollar-euro exchange rate and take a decision on what to do, Central Bank Governor Sultan bin Nasser al-Suweidi told reporters, adding that the board would meet in September.

The exchange rate is fluctuating and we haven’t seen the end of fluctuations, he said, without giving further details.

Suweidi had said a fall in the US dollar, in which oil is priced, had led to a higher-than-normal inflation of around five per cent last year.

The euro gained nearly 60 per cent against the dollar in the three years to 2004, due partly to expectations central banks in the Middle East were diversifying away from the falling dollar into the euro.

The UAE central bank has capital and reserves of around 49.66 billion dirhams ($13.52 billion) as of September 2004. The UAE dirham is pegged to the US dollar.—Reuters