DUBAI, 8 October 2007 — The government of the United Arab Emirates, struggling to contain inflation, warned businesses yesterday against increasing prices in the run-up to celebrations that mark the end of the month of Ramadan.

The economy ministry, which says inflation hit a 19-year high of 9.3 percent in 2006, took out advertisements in newspapers urging suppliers and retailers to “avoid all forms of exploitation of consumers.”

The ministry will prosecute violators of consumer protection rules and could close their shops, it said in advertisements published in newspapers including the Gulf News and Emirates Today.

The central bank is hamstrung in its efforts to contain inflation by the need to shadow US interest rates to maintain the relative appeal of the dirham which is pegged to the dollar.

The dollar tumbled to record lows against a basket of six currencies last week, driving up the cost of the UAE’s imports from Europe and some parts of Asia. It also hurts most expatriates working in the UAE, where foreigners make up more than 80 percent of the population.

Separately, the United Arab Emirates’ financial markets regulator has banned three brokerages from making purchases for 15 days. The Emirates Securities & Commodities Authority said in a statement the decision would affect Islamic Brokerage for Financial Services, the Emirates Islamic Shares and Bonds Center and Al Dhafra Financial Brokers.

It gave no reason for the ban.

“We would like to inform you of the decisions from the authority chairman ... to stop the companies mentioned from carrying out brokerage services for 15 days starting Oct 7, 2007 and ending Oct 21, 2007,” said the statement posted on the Dubai bourse website.

“The decision is limited to prohibiting these companies from implementing or ordering any purchases while allowing them to implement and order the sale of shares belonging to the investors that have accounts with them or transferring them to another broker ... or their banks.”

The daily Khaleej Times reported last week that the regulator had suspended 11 brokerages for one month because they failed to increase their capital and bank guarantees.

Meanwhile, stock markets in the United Arab Emirates are poised to recover from a 2006 slump and weakness earlier this year, Goldman Sachs said in report.

Goldman, the world’s largest investment bank by market value and revenue, started coverage of 22 companies listed on the Abu Dhabi and Dubai markets, the two domestic bourses of the UAE, the world’s sixth-largest oil exporter.

“Equity markets in the region look inexpensive relative to alternative emerging markets and the developed world and have showed low or negative correlation to global equities,” Goldman said in the note dated Sept. 28.

“A combination of strong growth, low valuations and low correlation is highly attractive in any environment, but all the more when global markets and the oil price are around all-time highs,” it said.

Goldman gave 10 of the 22 stocks a “buy” rating and four a “sell” rating. The group of stocks with a “buy” rating have the potential to gain 50 percent on a weighted average basis, it said.

Dubai-based Emaar Properties, Abu Dhabi rival Aldar Properties and Islamic mortgage lender Tamweel were among the stocks that received a buy recommendation.

The UAE markets had bottomed out in April after falling more than 55 percent from their 2005 peaks, Goldman said.

“We believe that Middle East equity markets are set for recovery, as continued strong growth, attractive valuations and improving market access should provide the ingredients for sustained growth from lows earlier this year,” it said.