Gulf oil producers should be more willing to discuss the viability of linking their currencies to the weakening US dollar, an adviser to Qatar's ruler said.

The issue has gained momentum after the dollar's slide to 15-month lows and a recovery oil price recovery that is helping economies in the world's top oil exporting region emerge from a downturn.

'I think they should be more prepared to talk about their currency pricing because what we are having now is the dollar sliding and it is having an impact on the price of currencies linked to it,' Ibrahim al-Ibrahim told Reuters in an interview.

Qatar, one of the world's largest investors through its sovereign wealth fund, is part of a planned monetary union with three fellow Gulf Arab countries, of which three peg their currencies to the dollar.

In June, Ibrahim said Qatar, the world's top natural gas exporter, should reconsider linking its currency to the US dollar and diversify its investments away from the weakening greenback.

He called for dropping the peg already last year as the country reeled under record inflation, which stemmed in part from the linkage to the dollar and record high oil prices.

Gulf Arab countries, except for Kuwait, tie their currencies to the dollar and their central banks invest heavily in dollar-denominated assets.

Ibrahim also saw no determination in the Organization of the Petroleum Exporting Countries to replace the dollar as a pricing unit for oil deals.

'I do not see anything real, no real effort in Opec. I don't think there is a real discussion on the unit of pricing oil,' he said.

A long-running debate over the currency used for commodity dealings was revived again in October by a British newspaper that said China, Japan, Russia and France were in secret talks with Gulf Arab states to stop using the dollar for oil trading.

Big oil producers denied it at the time, but dollar weakness has kept alive the question of whether it can remain the world's reserve currency.

But Qatar's Oil Minister Abdullah al-Attiyah said in October the debate was ongoing on using the US dollar for oil trade or shifting to a basket of currencies.

The dollar index, a gauge of the greenback's performance against six major currencies, hit a 15-month low of 74.774 on Wednesday.

Analysts said inflation in the region is much lower now than in 2007, when speculation about dropping the pegs swirled, while key economies in the region - Saudi Arabia and United Arab emirates - are slowly recovering from the downturn.

'Before we had overheating economies and rising inflation, now we have slow growth economies and lower inflation,' said John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole in Riyadh.

'Qatar is witnessing periodic deflation even if it will witness the highest real GDP growth rates in the Gulf by far. The likelihood of a currency regime change now is nil,' he said.

Average inflation in the region should stand at 3.8 percent next year, slightly up from 3.7 percent in 2009 but well down from 10.8 percent in 2008, according to the International Monetary Fund.

The global lender is forecasting the Opec member economy will expand by 11.5 per cent in the calendar year of 2009 and by 18.5 per cent next year on the back of a massive expansion of its gas facilities.-Reuters