GCC rules out revaluation, peg to stay
Doha, May 11, 2008
Gulf Arab states will not revalue their currency pegs to the weak dollar despite soaring inflation, and plan to stick to a deadline for currency union by 2010, the chairman of a meeting of finance ministers said.
Dollar pegs in all Gulf states except Kuwait compel their central banks to track the US Federal Reserve -- which has introduced a series of rate cuts -- although in the Gulf inflation is spiralling and economies are booming.
"There is no revaluation ... it is as it is," meeting chairman Qatari Finance Minister Youssef Hussein Kamal said of Gulf currency pegs to the dollar late on Saturday.
Qatar currently chairs the six-member Gulf Cooperation Council (GCC), which also includes Kuwait, Saudi Arabia, Oman, Bahrain and the United Arab Emirates.
"The schedule (for currency union by 2010) is there and is on track," Kamal told reporters after the meeting in the Qatari capital.
He said GCC finance ministers and central bankers would meet to review the 2010 currency union plan during the Muslim fasting month of Ramadan, which this year starts around the end of August and the beginning of September.
Gulf policymakers said last year the 2010 deadline would be hard to meet as consensus crumbled on how to deal with spiralling inflation and the weak dollar. But GCC central bankers have more recently been upbeat on overcoming technical hurdles. - Reuters