Qatar still backs dollar peg – cen bank boss

Comments follow another senior bank exec saying country needs more flexible exchange rate
Qatar still backs dollar peg – cen bank boss
Qatar Central Bank headquarters.
By Daniel Shane
Thu 23 May 2013 10:52 AM

Qatar continues to support pegging its riyal to the US dollar, the Gulf state’s central bank governor told Bloomberg.

Rival news agency Reuters quoted the central bank’s director of research earlier this week as saying that a “more flexible exchange rate” than the peg allowed would better suit managing inflation risk over the next decade.

“He is not reflecting the central bank,” Governor Abdullah Saud Al Thani told Bloomberg, referring to research director Khalid Alkhater’s remarks.

Qatar and the rest of the GCC countries excluding Kuwait peg their respective currencies to the dollar. Gas-rich Qatar has not cut its benchmark interest rate since August 2011.

Earlier this month, former Minister of Economy for Lebanon Dr Nasser Saidi told Arabian Business said that the dollar peg helped make a stronger case for GCC countries to introduce a single currency.

He added that low levels of debt, low budget deficits, large pools of international reserves and abundant natural resources also meant a common currency would make sense.

The creation of a single monetary union across the Gulf Arab bloc has been an aim of the GCC since the early 1980s, but the plan has stuttered amid the UAE’s withdrawal in 2009 over concerns Saudi Arabia would wield too much influence.

Policymakers were also said to have lost political will for the project in light of the euro crisis, with some commentators forecasting that a common currency will take at least another five years to come to fruition.

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