US will win financial fight says Saudi Arabia

The Saudi Arabian government is confident in the United States' ability to fight the financial crisis without destabilising the value of the dollar, to which many of the Gulf currencies are pegged. "Up until now we have confidence in the way the US is addressing the issues, particularly as it affects the dollar as our currency of pegging," said Muhammad al Jasser, the governor of Saudi Arabia's central bank, at the GCC Banking Conference in Manama earlier today.

Mr al Jasser said that the Saudi Government, which holds a large portion of its reserves in dollar-denominated assets, is not taking special measures to prepare for a potential decline in the value of the dollar, which many analysts expect. A fall in the value of the dollar would also raise the price of imports for Gulf states, and in turn stoke inflation. "We have not seen anything that would make us worry about our assets in dollars at this time, but of course this is a crisis in motion, and we always have to be prudent and watch what is happening," Mr al Jasser said.

"Our economy's exchange rate is pegged to the dollar, so we are still comfortable with that currency as the appropriate one to peg to at this time," he said. tpantin@thenational.ae