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Qatar must act on peg says adviser

Doha, June 2, 2008

Qatar needs to act over its peg to the dollar, the economic adviser to the country's ruler said, even as the inflation rose to a near record of 14.75 per cent.

"Things are not getting better, action should be taken," Ibrahim Al-Ibrahim told Reuters from the Qatari capital, Doha, when asked about possibly dropping the peg.

The government "is trying to do it but there are many constraints," he said. The main obstacle is whether Qatar should act alone or with its Gulf Arab partners, Ibrahim said.

Inflation is climbing, driven more by commodity and food prices, rather than rents, Ibrahim said.

Meanwhile, the annual inflation in Qatar rose for a third quarter running in March to 14.75 percent, the country's state Planning Council said, amid a surge in food and commodity prices, and rents.

The Consumer Price Index reached 166.87 points at March 31, the council said on its website, without giving year-earlier data. The index was at 145.42 points on March 31 last year, according to earlier Planning Council figures.

Inflation at the end of December was 13.74 percent. The last time it was higher was on March 31 last year when it was 14.81 percent.

As in other Gulf Arab oil producers, Qatar's economy is booming due to a near seven-fold surge in oil prices in the last six years, while it is having to lower interest rates because of its currency peg to the dollar. This is fuelling speculation that the country might drop the link in favour of a basket of currencies.

On a quarterly basis, food, beverage and tobacco prices surged the most in Qatar, up 7.81 percent over December 31, the Planning Council said.

Rents and energy prices rose 4.76 percent, and transport and communications 4.33 percent, spurred mainly by more expensive airline tickets, the council said. - Reuters    




Tags: Qatar | Dollar | peg |

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