Gulf nations maintain dollar peg for currencies


By Agence France-Presse
via Yahoo News
Tuesday, December 4, 2007

DOHA, Qatar -- Leaders of the Gulf Cooperation Council have decided at their annual summit to keep pegging their currencies to the sliding dollar, Qatari Prime Minister Sheikh Hamad bin Jassem al-Thani said on Tuesday.

"Right now the policy is to stick to the dollar. ... The GCC is concerned about the (weakening) dollar. No decision on the currency for the moment," he told reporters.

The foreign minister of the United Arab Emirates, Sheikh Abdullah bin Zayed al-Nahayan, had on Monday put an end to speculation that the GCC leaders would decide on de-pegging from the dollar, saying this was not on the cards.

"There is no intention to take a decision at this summit regarding de-pegging the Gulf currencies to the dollar," the UAE news agency reported Sheikh Abdullah as saying.

The six-nation GCC is experiencing high growth rates of between 4 and 8 percent because of soaring oil revenues that have boosted liquidity to new levels.

But inflation has also risen to double digits in some Gulf states as a result.

Kuwait in May dropped the dollar peg in favour of a basket of currencies to ward off imported inflation, but the other five GCC states, including oil powerhouse Saudi Arabia, have kept their currencies linked to the dollar.

To preserve the value of their national currencies, Gulf states have in the past matched any movement in US interest rates.

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