The UAE should revalue the dirham by 15 per cent and move to a currency basket within two years, an official of the Dubai Chamber of Commerce and Industry said.

Dr Eisa Abdelgalil, a senior economist at Dubai Chamber's Data Management and Research Department, cited the need for the government to tame inflation and the effects of a weak US dollar, to which the dirham is pegged at 3.67.

"According to our calculations, based on the drop of the dollar against the other major currencies, the dirham should be revalued by 15 per cent," he said.

His comments come despite the government's categorical statement against currency revaluation.

He added that the UAE must act quickly to abandon the dollar-peg and move to a basket of currencies in a year before the deadline for the GCC economies to create a single currency by 2010.

UAE Central Bank Governor Sultan bin Nasser Al Suwaidi put to rest last month all speculations, saying there was no plan to either revalue the dirham or abandon the dollar peg.