The Gulf should immediately carry out a one-time revaluation of its US dollar pegged currencies to prevent any further losses against the weakest Greenback in a quarter of a century, Steve Forbes has warned delegates at today’s first session at Leaders in Dubai.
The President, CEO and editor-in-chief of Forbes magazine and twice a candidate in the US Presidential primaries, told delegates that a one time revaluation was “essential” for Gulf currencies to regain control against an increasingly weakening dollar.
“Currencies should be stable in value, that’s the first rule. Look at what the Federal Reserve has done in the US. By printing too many dollars and allowing the property sector to build four years worth of houses in two years it has created a credit crisis,” he said.
“Eventually, and rather than going for a basket of currencies, Gulf countries should do a one-time revaluation and keep it fixed, whether it is 8%, 10% or 12%, and then re-peg to the dollar.”
Speaking on the rise of China he called the US government’s decision to put pressure on Chinese authorities to revalue the Renminbi (Chinese currency) a “huge mistake”. “What should not be done now is to let currencies float in internal markets, it’s an invitation for chaos. What should be done is a one-time revaluation and then to keep it fixed,” he said.
“Just look at the price of gold. If it goes over US$450 per ounce then you know there is going to be a distortion in the US economy,” Forbes added.
Forbes called the International Monetary Union (IMF) “barbarians”, said that it should be “sent to oblivion” and that its major flaw was that it “always tells countries to de-value”. He even suggested that the people of North Korea would not want the IMF to help them solve its monetary issues.
On Gulf companies investing overseas, especially in the US, Forbes advised GCC firms to go for minority stakes, “go slowly” into deals due to political reasons and to push private companies to invest rather than just large Sovereign Wealth Funds.
“Investment overseas always raises concerns, particularly in the States and you always have to be aware of the political sensitivities. Think back to the DP World deal in the US where it tried to buy six US ports. Some politicians went demagogic.”
“Soveriegn Wealth Funds should be very transparent, they should release more information on themselves and what they are doing and they should give more preparation to investing abroad. That way they would avoid any international and political buzzsaws.”
Forbes is a die-hard Republican, was twice a candidate in the US Presidential primaries in 1996 and 2000 and is also a well publicised supporter of current Republican candidate and former mayor of New York Rudolf Giuliani.
Asked who would win the Democratic and Republican nominations he said: “Mrs [Hilary] Clinton is the obvious Democratic candidate and it will be hard to beat her. With the Republicans it is less clear with Mr McCain, Mr Giuliani and another name, Mike Huckabee, who you will be hearing a lot more about in the coming weeks, all with a chance.”
Huckabee is the former governor of Arkansas, an ordaned Southern Baptist minister and opposes same-sex marriage, abortion and civil unions.
“The difference between the two is on the subject of international trade. The Democrats are very protectionist and anti foreign investment, more so in fact now than when Bill Clinton was President,” added Forbes.
On Iran, Forbes said that no US military would be taken between now and the Presidential election, but instead that the US and Europe would impose further economic sanctions on the Islamic Republic.
“If Iran had a more moderate government then it would be much better for the region. I wish we had done that three or four years ago,” he concluded.
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