Gulf Arab countries will discuss an option to peg their planned single currency to a basket instead of the US dollar.
GCC to discuss currency basket peg
KUWAIT // Gulf Arab countries will discuss an option to peg their planned single currency to a basket instead of the US dollar, a Kuwaiti government official said on Tuesday. GCC officials have said the single currency is expected to be linked to the dollar, although Qatar has repeatedly questioned its riyal peg over the past months as the dollar plunged to 15-month lows against major currencies.
"It is not necessary for the GCC currency to be linked to a certain currency. It could be one currency or a basket of currencies," Kuwait Foreign Minister Sheikh Mohammad al Salem al Sabah told parliament. "And this will be discussed among the Gulf countries," he said. With the exception of Kuwait, which dropped its dollar peg in favour of a currency basket in 2007, the other three union members Saudi Arabia, Qatar and Bahrain all have pegged their currencies to the greenback.
Kuwaiti MPs delayed on Tuesday voting on monetary union to December 8, saying they needed more time to assess economic implications of the project. Only Saudi Arabia, the world's top Arab economy, has ratified monetary union so far, leaving question marks over the viability of the project. "The GCC currency is not tomorrow or the day after. This needs time and sufficient time," Kuwait Finance Minister Mustapha al Shamali told the parliamentary session.
Last month, finance ministers and central bank governors from the world's top oil producing region called on Kuwait, Qatar and Bahrain to ratify the project by the end of the year. Only four of the Gulf Cooperation Council's (GCC) six member states are now taking part in monetary union after the United Arab Emirates opted out in May, dealing a blow to the project, three years after Oman did the same.