GCC defends dollar peg, single currency deadline

INFLATION BATTLE: Gulf states plan to stick with their dollar pegs and the 2010 deadline for establishing a currency union, Kamal said. (Getty Images)

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 GCC, which also includes Kuwait, Saudi Arabia, Oman, Bahrain and the UAE.

"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.

RELATED: Qatar casts doubt over monetary union deadline

But GCC central bankers have more recently been upbeat on overcoming technical hurdles. (Reuters)

RELATED: Gulf in fresh push to hit single currency deadline

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READERS' COMMENTS

Freegold
Posted by Ivo Cerckel, Siquijor, Philippines on Sunday 11 May 2008 at 17:13 UAE time


The GCC needs Freegold, a freely floating price of gold, as an alternative to the dollar regime.
Freegold makes gold the natural vehicle to temporarily or eternally store one’s wealth in, in order to be able to later convert it into tangible wealth.
Freegold in the central banks’ strong-rooms has the same role to fulfill as the Mona Lisa in the Louvre-museum in Paris.
A wealth reserve which would now be in the strong room (the Louvre) of a monetary union.

As the GCC central bankers argue, there are no technical hurdles which cannot be overcome by 2010.

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