E-mail Article

Printer Friendly

Share Article

Gulf single currency unlikely by 2010

Creating a single currency for six Gulf Arab oil producers could take longer than the initially agreed 2010 deadline, United Arab Emirates Central Bank Governor Sultan Nasser al-Suweidi said on Thursday.

The UAE does not, however, see reason "at this point" to change a peg to the dollar, which was adopted with Saudi Arabia and the four other states to prepare for the single currency, he said.
The timetable for monetary union in the world's top oil exporting region has been in doubt since Oman, one of the six, announced last year it would not join by 2010.

Then Kuwait dropped its dollar peg last month, throwing the project in to disarray.

Monetary union would be achieved in three phases with a single currency being the final step, Suweidi said at a conference in Dubai.

"If we achieve the first two stages of monetary union by 2010, that will be enough and sufficient," he said, taking questions from the audience.

Freeing capital flows among the six states, and reducing the cost of certain foreign exchange transactions, would precede the single currency, Suweidi said.

He described the second phase of monetary union as "the reduction or elimination of the cost of exchange cross-rates between our currencies".

Analysts in a Reuters poll in March tipped the UAE as the country most likely to revalue its currency after Kuwait to cope with dollar's slide to a record low against the euro in April.

"At this point it doesn't make sense to change the peg," Suweidi told reporters.

Kuwait cited the rising cost of imports from Europe and some Asian countries as the main reason for its decision on May 20 to adopt a basket of currencies.

"This is something they are entitled to do. We have no problem with it. We will live with it," Suweidi said.

No Comments