Ministers remain silent on peg rift

Ministers attending the GCC Summit in Doha are remaining tight-lipped over questions about currency reform, in an attempt to avoid fuelling speculation about a rift over dollar pegs.

The United Arab Emirates foreign minister and the finance ministers of Qatar and Saudi Arabia avoided questions about a common position on currencies in the six-nation Gulf Cooperation Council, which is preparing for monetary union as early as 2010.

On the foreign exchange policy the only thing the three ministers would say on the group's behalf was that currency reform was not on the agenda of a two-day summit that ends on Tuesday.

But they were willing to talk about the policies of their own governments.

UAE Foreign Minister Sheikh Abdullah bin Zayed al-Nahayan declined to comment yesterday when asked: "Are you studying, as a GCC bloc, a move from the peg or revaluing your currencies?"

"This is a question for finance ministers," he said.

He later rebuffed a similar question, saying: "This is not a question for a foreign minister. There is no intention at this meeting to talk about monetary issues."

He was then asked whether the UAE, the second largest Arab economy, planned to consider revaluing its dirham at any stage.

"We will do that after we consult with our GCC colleagues," Sheikh Abdullah, half-brother of the UAE president, said.

The UAE raised expectation of changes in currency policy when its central bank governor called last month for Gulf states to drop their pegs and start tracking a currency basket as Kuwait did in May.

Saudi Arabia, the largest Arab economy, dismissed the idea on Sunday, again with a carefully scripted sound bite.

"I can't tell you anything," said Saudi Finance Minister Ibrahim Al-Assaf in response to several questions on whether Gulf countries were looking at revaluing their currencies together.

As he was walking away from a closed-door session he was asked: "There is an incredible amount of speculation on your currency globally. How do you intend to clamp down on this speculation if you will not comment?"

Assaf stopped and responded: "I am talking about Saudi Arabia," he said. "On the peg, we will not drop it. That's it."

Qatari Finance Minister Hussein Kamal was equally careful, even though as host he would traditionally speak on behalf of all six countries.

He repeatedly declined to comment on the question: "Will you consider a multilateral revaluation?" by sometimes simply waving his hands in response.

Asked whether Qatar was committed to its peg, Kamal said: "Yes. We are committed, we are committed."