Qatar labels Merrill depeg report 'baseless'

REPORT RUBBISHED: Kamal (pictured) said there was no truth in the report claiming Qatar plans to depeg from the dollar in the next six months. (Getty Images)

Qatar's finance minister on Wednesday flatly dismissed claims made by Merrill Lynch that the Gulf state could soon depeg its currency from the floundering US dollar, labelling the report “baseless”.

Yusus Kamal was responding to a report by the US investment bank that claimed the US government had given Qatar and neighbour the UAE the green light to drop their currency pegs to the dollar to help battle record inflation.

The report said the two Gulf states would move to a currency basket within the next six months.

“This report is completely untrue and baseless,” Kamal told reporters after a GCC cooperation meeting held in Doha, according to UAE daily Emirates Business 24/7.

Abdullah Al Qahtani, the under secretary to the Ministry of Economy and Trade, echoed Kamal’s comments and underscored the position of the Qatari government as the sole decider on matters of monetary policy.

“Ending the peg between our currency and the US dollar is a sovereign decision that should be taken only by the Qatari Government,” Emirates Business quoted him as saying.

“It is good to read such reports but this issue is up to the state of Qatar not an independent institution like Merrill Lynch."

All Gulf states, bar Kuwait, peg their currencies to the dollar. The dollar peg has been blamed for increasing the cost of imports and restricting the central bank's ability to fight inflation.

Gulf states' dollar pegs forces central banks to track US monetary policy to maintain the relative attractiveness of their currencies.

The US Federal Reserve has been slashing interest rates since September to stave off recession at a time when Gulf central banks should be hiking rates to rein in inflation.

The UAE has not yet responded to Merrill’s report, although Central Bank Governor Sultan bin Nassir Al Suweidi has repeatedly ruled out abandoning the dollar peg.

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