Qatar riyal 30pc undervalued: PM
Doha, February 25, 2008
Qatar's dollar-pegged riyal is undervalued by as much as 30 percent and currency revaluation is being studied, among several options, to check inflation, Prime Minister Sheikh Hamad bin Jassim bin Jabr al-Thani said in an interview.
Inflation in the richest Arab country by per capita hit 13.74 percent in the fourth quarter.
He urged other Gulf countries to bridge differences over a single currency, saying monetary union could avert possible unilateral revaluations.
"It's now the time for the Gulf to have its own currency," Sheikh Hamad said in the Qatari capital, Doha. "We are thinking about it and in talks ... we are discussing with Gulf countries, but there is no consensus."
Qatar, the world's largest exporter of liquefied natural gas, would prefer to make any change to its currency policy in concert with Saudi Arabia and its other Gulf Arab partners preparing for monetary union as early as 2010, Sheikh Hamad said.
"We prefer always to act with all the GCC countries," said Sheikh Hamad, whose country currently chairs the six-nation Gulf Cooperation Council that includes the United Arab Emirates and Kuwait.
Asked how long Qatar could continue with its existing foreign exchange regime, he said: "We cannot give a time. It is something that we have to see how it goes and look at where the dollar is going."
Dollar pegs force Gulf oil producers to shadow US monetary policy at a time when the Federal Reserve is cutting rates to ward off recession and the Gulf economies are booming on a near five-fold jump in oil prices since 2002. - Reuters