by Dylan Bowman and Reuters on Wednesday, 30 January 2008
MAJOR CHANGE: Al-Ibrahim said Qatar could move without other GCC members. (Getty Images)Qatar is studying the possibility of a "major" change in monetary policy, which could include depegging its riyal from the flagging US dollar, the ruler's economic advisor said on Wednesday.
Ibrahim Al-Ibrahim said significant change was needed to address record inflation in Qatar, which hit 14% last year.
Al-Ibrahim said the government was looking at several policy options to reduce inflation, one of which was dropping the riyal's dollar peg.
"We are studying all kinds of possible ways to price our exchange rate or to price our currency," he told newswire Reuters. "A basket is possible."
Al-Ibrahim said Kuwait's decision to break ranks with its neighbours in May last year and link its dinar to a basket of currencies did not go far enough.
However, he stressed that Qatar wanted to make any decision in collaboration with other GCC member states, but left the door open for the Gulf state to move on its own if necessary.
"Kuwait really did it very little," Al-Ibrahim said. "Change should be major change, minor change won't solve the problem... Really, we would like to do everything we can through the GCC."
When asked if Qatar could act unilaterally, he said: "I think we can."
He said officials would make foreign-exchange policy recommendations to the government this year, without saying exactly when.
Gulf states' peg to the dollar forces them to track US monetary policy at a time when the Federal Reserve is cutting interest rates to stimulate the economy.
Qatar has slashed its deposit-facility rate by 150 basis points in four moves since September 18, tracking the Fed, which has reduced rates by 175 basis points.
It is the second time in a week Al-Ibrahim has raised speculation Qatar is seriously considering severing its ties to the dollar in an effort to bring down inflation.
The economic advisor said in comments published on Tuesday that Qatar was studying linking the riyal to a basket of currencies, stating that "pegging the riyal to only one currency has many disadvantages".
RELATED: Qatar studying dollar peg - official
Analysts described Al-Ibrahim's remarks as "sensible" and the clearest indication yet that Qatar could depeg from the dollar in order to tackle inflation.
"The comments are very sensible. Any currency reform needs to be substantial," said Marios Marathefis, Standard Chartered's regional head of research. Gulf states should allow their currencies to appreciate by 20% against the dollar, he said late last year.
Simon Williams, senior economist at HSBC, said: "The comments are a very strong sign that the Qatari authorities are seriously examining all of their policy options to deal with inflation, including monetary reform."
Countries across the Gulf are coming under increasing pressure to depeg or revalue their currencies due to the fall in the dollar, which has been blamed for driving up the cost of imports from places such as Europe.
"Inflation is definitely affected by a reduction in the dollar, but the major contributors are the very high rate of growth of the economy, coupled with the high rate of government expenditure," Al-Ibrahim told Reuters.
He said a Qatari plan to sell bonds to absorb liquidity would give the central bank more control over money supply.
"We have made a lot of efforts to affect the price of raw materials in building, for instance, and we are doing a lot of laws, mainly consumer protection laws, that really reduce inflation," Al-Ibrahim said.
The government is considering increasing salaries and subsidising food, he said on Tuesday.
Wednesday, January 30, 2008
Tuesday, January 29, 2008
Gulf-wide currency revaluation against the weak dollar would reach up to 5-10 per cent
Dubai - With the surge in inflation across the Gulf Co-operation CouncilGulf Co-operation CouncilCooperation Council for the Arab States of the Gulf member-economies, a GCCGCCCooperation Council for the Arab States of the Gulf-wide currency revaluation against the weak dollar would reach up to 5-10 per cent from an earlier forecast of 3-5 per cent, according to EFG-Hermes, Egypt's biggest investment bank.
"The rise in inflation also has socio-political connotations and adds to the probability of GCCGCCCooperation Council for the Arab States of the Gulf currency reform," the bank said in GCCGCCCooperation Council for the Arab States of the Gulf Economics: Further into Negative, a report written by Dubai-based Monica Malik, senior economist at EFG-HermesEFG.
It also reiterated a 60-per cent probability that the UAE or Qatar, or both, may abandon the dollar-peg and move the dirham or rial to a currency basket during the first six months due to the "aggressive interest rate cuts" done by the US Federal Reserve this week.
But EFG-HermesEFG-HermesEFG-Hermes UAE pointed out that the GCCGCCCooperation Council for the Arab States of the Gulf countries, which move as a bloc, would more likely revalue their currencies than shift their peg to a currency basket.
It said that linking the currencies of the GCCGCCCooperation Council for the Arab States of the Gulf countries to a basket of currencies would provide "greater money flexibility" which a one-time revaluation against the greenback could not. "We maintain our view...of a move away from the US peg in H12008 by one or more states (the UAE and/or Qatar) or the GCCGCCCooperation Council for the Arab States of the Gulf as a whole," it added.
Market analysts have said that the slash in interest rates in the UAE and other GCCGCCCooperation Council for the Arab States of the Gulf members, which followed the US Fed's 75 basis points (bps) cut in interest rates to 3.5 per cent to ward off a recession, would stoke imported inflation across the Gulf region due to the depreciation of dollar-pegged currencies against the other currencies.
"The US rate cuts illustrate just how out-of-sync the GCCGCCCooperation Council for the Arab States of the Gulf and the US economies are...." EFG-HermesEFG-HermesEFG-Hermes UAE said, stressing that economic fundamentals have remained and interest rates low in the Gulf region despite strong economic activity on the ground and high credit growth and liquidity in the banking sector.
"These factors will continue to add to the inflationary environment," it said. It added that lending rates, which the GCCGCCCooperation Council for the Arab States of the Gulf countries had kept at bay, would only have a limited impact on stemming credit growth.
"Firstly, given the strong level of liquidity in the banking sector, borrowing from the central bank is limited," it stressed. "Secondly, inter-bank rates are lower than central bank lending rates, thereby also reducing the incentive of commercial banks to borrow from the central banks."
Some estimates put at 10 per cent the UAE inflation last year from the 19-year high of 9.3 per cent in 2006 because of the weakening dollar while while EFG-HermesEFG-HermesEFG-Hermes UAE said that inflation in Saudi Arabia surged to 6.5 per cent by end-2007, adding that Oman and Kuwait had also reached multiyear-high inflation rates.
Aside from Kuwait, which unshackled its dinar from the greenback in May, the currencies of Saudi Arabia (rial), Bahrain (dinar), the UAE (dirham), Oman and Qatar (both rial) are all pegged to the dollar.
"The aggressive rate cuts in the US increases the probability of currency reform in the GCCGCCCooperation Council for the Arab States of the Gulf said. "We have highlighted in our research that key factors in the timing of a move from the GCCGCCCooperation Council for the Arab States of the Gulf will be aggressive interest rate cuts in the US and/or marked weakening in the US dollar."
The UAE and its Gulf neighbours said earlier that there would be no unilateral move to a currency basket from any of the GCCGCCCooperation Council for the Arab States of the Gulf members.
JOSE FRANCO
© Khaleej Times 2008
"The rise in inflation also has socio-political connotations and adds to the probability of GCCGCCCooperation Council for the Arab States of the Gulf currency reform," the bank said in GCCGCCCooperation Council for the Arab States of the Gulf Economics: Further into Negative, a report written by Dubai-based Monica Malik, senior economist at EFG-HermesEFG.
It also reiterated a 60-per cent probability that the UAE or Qatar, or both, may abandon the dollar-peg and move the dirham or rial to a currency basket during the first six months due to the "aggressive interest rate cuts" done by the US Federal Reserve this week.
But EFG-HermesEFG-HermesEFG-Hermes UAE pointed out that the GCCGCCCooperation Council for the Arab States of the Gulf countries, which move as a bloc, would more likely revalue their currencies than shift their peg to a currency basket.
It said that linking the currencies of the GCCGCCCooperation Council for the Arab States of the Gulf countries to a basket of currencies would provide "greater money flexibility" which a one-time revaluation against the greenback could not. "We maintain our view...of a move away from the US peg in H12008 by one or more states (the UAE and/or Qatar) or the GCCGCCCooperation Council for the Arab States of the Gulf as a whole," it added.
Market analysts have said that the slash in interest rates in the UAE and other GCCGCCCooperation Council for the Arab States of the Gulf members, which followed the US Fed's 75 basis points (bps) cut in interest rates to 3.5 per cent to ward off a recession, would stoke imported inflation across the Gulf region due to the depreciation of dollar-pegged currencies against the other currencies.
"The US rate cuts illustrate just how out-of-sync the GCCGCCCooperation Council for the Arab States of the Gulf and the US economies are...." EFG-HermesEFG-HermesEFG-Hermes UAE said, stressing that economic fundamentals have remained and interest rates low in the Gulf region despite strong economic activity on the ground and high credit growth and liquidity in the banking sector.
"These factors will continue to add to the inflationary environment," it said. It added that lending rates, which the GCCGCCCooperation Council for the Arab States of the Gulf countries had kept at bay, would only have a limited impact on stemming credit growth.
"Firstly, given the strong level of liquidity in the banking sector, borrowing from the central bank is limited," it stressed. "Secondly, inter-bank rates are lower than central bank lending rates, thereby also reducing the incentive of commercial banks to borrow from the central banks."
Some estimates put at 10 per cent the UAE inflation last year from the 19-year high of 9.3 per cent in 2006 because of the weakening dollar while while EFG-HermesEFG-HermesEFG-Hermes UAE said that inflation in Saudi Arabia surged to 6.5 per cent by end-2007, adding that Oman and Kuwait had also reached multiyear-high inflation rates.
Aside from Kuwait, which unshackled its dinar from the greenback in May, the currencies of Saudi Arabia (rial), Bahrain (dinar), the UAE (dirham), Oman and Qatar (both rial) are all pegged to the dollar.
"The aggressive rate cuts in the US increases the probability of currency reform in the GCCGCCCooperation Council for the Arab States of the Gulf said. "We have highlighted in our research that key factors in the timing of a move from the GCCGCCCooperation Council for the Arab States of the Gulf will be aggressive interest rate cuts in the US and/or marked weakening in the US dollar."
The UAE and its Gulf neighbours said earlier that there would be no unilateral move to a currency basket from any of the GCCGCCCooperation Council for the Arab States of the Gulf members.
JOSE FRANCO
© Khaleej Times 2008
GCC currency may be linked to euro-led basket,
22/Jan/2008
The Gulf states are discussing pegging a planned common currency to a euro-dominated basket rather than to the US dollar, the head of the Federation of GCC Chambers has said.
“There is discussion between GCC countries about moving from a dollar peg to a more flexible currency basket made up predominantly of euros,” Abdulrahim Hasan Naqi, secretary-general of the FGCCC, said in an interview in Abu Dhabi.
“The euro is attractive for the future GCC currency because the European Union is close in structure to the GCC,” Naqi said, adding that no official studies into the subject had been conducted so far. Presently, five GCC countries - Saudi Arabia, the United Arab Emirates, Qatar, Oman and Bahrain - peg their currencies to the dollar. Kuwait was the first to break ranks this year when it de-pegged from the weakening greenback.
Pressure has increased on GCC central banks to de-peg their currencies from the dollar as they battle accelerating inflation. “GCC countries should work together to fight inflation. Our suggestion is to buy together from outside as it will be cheaper in higher volumes, to invest in factories for food outside and to import from cheaper countries and to control our currencies,” Naqi said.
Oil-rich GCC countries have officially played down talks of de-pegging from the weakening dollar and publicly said any revaluation against the greenback will be done in unison.
“If GCC currencies do move to a currency basket the euro is likely to be an important currency but oil is priced in dollars so should make up a large part of the basket,” said Monica Malik, an economist at EFG-Hermes. On Friday, the euro traded at $1.4622 compared to its record high of $1.4967 in November.
http://www.gulfbase.com/site/interface/NewsArchiveDetails.aspx?n=51708
The Gulf states are discussing pegging a planned common currency to a euro-dominated basket rather than to the US dollar, the head of the Federation of GCC Chambers has said.
“There is discussion between GCC countries about moving from a dollar peg to a more flexible currency basket made up predominantly of euros,” Abdulrahim Hasan Naqi, secretary-general of the FGCCC, said in an interview in Abu Dhabi.
“The euro is attractive for the future GCC currency because the European Union is close in structure to the GCC,” Naqi said, adding that no official studies into the subject had been conducted so far. Presently, five GCC countries - Saudi Arabia, the United Arab Emirates, Qatar, Oman and Bahrain - peg their currencies to the dollar. Kuwait was the first to break ranks this year when it de-pegged from the weakening greenback.
Pressure has increased on GCC central banks to de-peg their currencies from the dollar as they battle accelerating inflation. “GCC countries should work together to fight inflation. Our suggestion is to buy together from outside as it will be cheaper in higher volumes, to invest in factories for food outside and to import from cheaper countries and to control our currencies,” Naqi said.
Oil-rich GCC countries have officially played down talks of de-pegging from the weakening dollar and publicly said any revaluation against the greenback will be done in unison.
“If GCC currencies do move to a currency basket the euro is likely to be an important currency but oil is priced in dollars so should make up a large part of the basket,” said Monica Malik, an economist at EFG-Hermes. On Friday, the euro traded at $1.4622 compared to its record high of $1.4967 in November.
http://www.gulfbase.com/site/interface/NewsArchiveDetails.aspx?n=51708
Sunday, January 27, 2008
Currency confusion hits GCC states
01 January 2008
--------------------------------------------------------------------------------
Currency confusion hits GCC states
by ArabianBusiness.com staff writer on Tuesday, 01 January 2008
At time of going to press, there was still uncertainty over the future of the five Gulf currencies’ dollar peg.
At time of going to press, there was still uncertainty over the future of the five Gulf currencies’ dollar peg.
There was uncertainty over the future of the Gulf currencies after a series of contradictory statements by the region's finance ministers, following the GCC Summit in Doha last month.
Economists and analysts had thought it likely an announcement would be made that the five GCC currencies still pegged to the dollar - the UAE dirham, Bahraini dinar, Omani rial, Qatari riyal and Saudi riyal - would either be revalued or pegged to a basket of currencies to compensate for the declining US dollar.
Some exchange houses in the UAE revalued the dirham by up to 17% during the GCC Summit, wary of losing money if the dirham was revalued. They were later penalised by the UAE Central Bank.
Story continues below ↓
advertisement
The dollar peg was reportedly not discussed at the summit, but a series of public comments since then by the heads of monetary policy in the five states has fuelled speculation that there could be at least a one-time revaluation of some of the currencies.
A local newspaper reported that Bahrain's Finance Minister Shaikh Ahmad Bin Mohammad Al Khali has told the advisory Shura council that the dinar will move from the dollar peg to a basket of currencies without appreciating.
Other reports have indicated that Qatar and the UAE, which have the highest inflation rates in the Gulf, are most likely to switch to a link with a basket of currencies, while Bahrain, Saudi Arabia and Oman maintain their peg to the dollar with a revaluation.
The US Federal Reserve cut interest rates by 25 basis points last month, a move that was copied by Saudi Arabia, the UAE, Bahrain and Qatar, despite concerns that it could fuel inflation.
Kuwait dropped the dinar's peg to the dollar at the World Economic Forum on May 20 last year, moving to a trade-weighted basket of currencies which is still dominated by the US currency. The dinar has appreciated by 5.5% since then.
Any decision by the other GCC states away from the dollar peg could delay the move to a Gulf single currency, which is still scheduled for 2010, although Oman has said it will not meet this deadline.
--------------------------------------------------------------------------------
Currency confusion hits GCC states
by ArabianBusiness.com staff writer on Tuesday, 01 January 2008
At time of going to press, there was still uncertainty over the future of the five Gulf currencies’ dollar peg.
At time of going to press, there was still uncertainty over the future of the five Gulf currencies’ dollar peg.
There was uncertainty over the future of the Gulf currencies after a series of contradictory statements by the region's finance ministers, following the GCC Summit in Doha last month.
Economists and analysts had thought it likely an announcement would be made that the five GCC currencies still pegged to the dollar - the UAE dirham, Bahraini dinar, Omani rial, Qatari riyal and Saudi riyal - would either be revalued or pegged to a basket of currencies to compensate for the declining US dollar.
Some exchange houses in the UAE revalued the dirham by up to 17% during the GCC Summit, wary of losing money if the dirham was revalued. They were later penalised by the UAE Central Bank.
Story continues below ↓
advertisement
The dollar peg was reportedly not discussed at the summit, but a series of public comments since then by the heads of monetary policy in the five states has fuelled speculation that there could be at least a one-time revaluation of some of the currencies.
A local newspaper reported that Bahrain's Finance Minister Shaikh Ahmad Bin Mohammad Al Khali has told the advisory Shura council that the dinar will move from the dollar peg to a basket of currencies without appreciating.
Other reports have indicated that Qatar and the UAE, which have the highest inflation rates in the Gulf, are most likely to switch to a link with a basket of currencies, while Bahrain, Saudi Arabia and Oman maintain their peg to the dollar with a revaluation.
The US Federal Reserve cut interest rates by 25 basis points last month, a move that was copied by Saudi Arabia, the UAE, Bahrain and Qatar, despite concerns that it could fuel inflation.
Kuwait dropped the dinar's peg to the dollar at the World Economic Forum on May 20 last year, moving to a trade-weighted basket of currencies which is still dominated by the US currency. The dinar has appreciated by 5.5% since then.
Any decision by the other GCC states away from the dollar peg could delay the move to a Gulf single currency, which is still scheduled for 2010, although Oman has said it will not meet this deadline.
Saturday, January 26, 2008
1982: THE UNIFIED ECONOMIC AGREEMENT BETWEEN THE COUNTRIES OF THE GULF COOPERATION COUNCIL
HISTORY:
In 1982, the GCC countries ratified an agreement that stated clearly "the member states shall seek to coordinate their financial, monetary and banking policies and enhance cooperation between monetary agencies and central banks, including an endeavor to establish a joint currency in order to further their economies."
CHAPTER SIX
FINANCIAL AND MONETARY COOPERATION
ARTICLE 2 1
Member States shall seek to unify investment rules and regulations in order to achieve a joint investment policy aimed at directing their domestic and foreign investments towards serving their interest, and realizing their peoples' aspirations for development and progress.
ARTICLE 2 2
Member States shall seek to coordinate their financial, monetary and banking policies
and enhance cooperation between monetary agencies and central banks, including the endevour to establish a joint currency in order to further their desired economic.
ARTICLE 2 3
Member States shall seek to coordinate their external policies in the sphere of
international and regional development aid.
In 1982, the GCC countries ratified an agreement that stated clearly "the member states shall seek to coordinate their financial, monetary and banking policies and enhance cooperation between monetary agencies and central banks, including an endeavor to establish a joint currency in order to further their economies."
CHAPTER SIX
FINANCIAL AND MONETARY COOPERATION
ARTICLE 2 1
Member States shall seek to unify investment rules and regulations in order to achieve a joint investment policy aimed at directing their domestic and foreign investments towards serving their interest, and realizing their peoples' aspirations for development and progress.
ARTICLE 2 2
Member States shall seek to coordinate their financial, monetary and banking policies
and enhance cooperation between monetary agencies and central banks, including the endevour to establish a joint currency in order to further their desired economic.
ARTICLE 2 3
Member States shall seek to coordinate their external policies in the sphere of
international and regional development aid.
No revaluation, Bahrain insists
by Natsuko Waki on Sunday, 27 January 2008
Bahrain's crown prince said on Saturday that even talking about revaluing the local currency against the dollar was irresponsible and the country had no plans to adjust the value of the dinar.
Speaking to newswire Reuters on the sidelines of the World Economic Forum (WEF), Sheikh Salman bin Hamad Al-Khalifa also said Bahrain's economy will grow around 7% this year and he was not concerned by the dollar's recent fall.
Speculation intensified that Gulf countries might revalue their currencies against a falling dollar after Kuwait broke ranks and started tracking a currency basket in May.
"Even talking about revaluation is irresponsible, and very counter productive. We have no intention of revaluing - plain, black and white," Sheikh Salman said.
Bahrain is one of the six Gulf currencies preparing for monetary union as early as 2010.
After hitting a record low against a basket of currencies, the dollar has failed to stage a lasting recovery due to concerns about a recession in the US economy.
"These things change very quickly by the world event or leadership, or changes in public sentiment. So I'm not concerned. Currencies go up and down," said Sheikh Salman, who runs the Economic Development Board, which oversees economic strategies.
He noted the world has experienced difficulties surrounding the US economy in the past but growth of Asian emerging countries are cushioning the damage this time.
"The main difference of course this time is that we have India and China rising. So the projections are that the world economy will grow by 4%," he said.
Bahrain is on a drive to restructure state firms ahead of planned privatisation and overhaul the labour market to give more jobs to Bahrainis over foreigners who make up about a third of the kingdom's population.
But analysts say the crown prince and his father's uncle Sheikh Khalifa bin Salman Al-Khalifa - prime minister for more than 35 years - are split over reforms and vision for the country's future.
In a rare display of royal disharmony, Bahrain's King Hamad bin Isa Al-Khalifa warned in January the government should not delay reforms led by the crown prince.
Sheikh Salman said on Saturday more needed to be done.
"I'm never completely satisfied, otherwise I will stop the reform process so one has to be always a little bit more ambitious and we have many ideas to pursue."
On the overall economy, Sheikh Salman expected growth of 7% this year, in line with the previous few years. (Reuters)
http://www.arabianbusiness.com/509269-no-revaluation-bahrain-insists
Bahrain's crown prince said on Saturday that even talking about revaluing the local currency against the dollar was irresponsible and the country had no plans to adjust the value of the dinar.
Speaking to newswire Reuters on the sidelines of the World Economic Forum (WEF), Sheikh Salman bin Hamad Al-Khalifa also said Bahrain's economy will grow around 7% this year and he was not concerned by the dollar's recent fall.
Speculation intensified that Gulf countries might revalue their currencies against a falling dollar after Kuwait broke ranks and started tracking a currency basket in May.
"Even talking about revaluation is irresponsible, and very counter productive. We have no intention of revaluing - plain, black and white," Sheikh Salman said.
Bahrain is one of the six Gulf currencies preparing for monetary union as early as 2010.
After hitting a record low against a basket of currencies, the dollar has failed to stage a lasting recovery due to concerns about a recession in the US economy.
"These things change very quickly by the world event or leadership, or changes in public sentiment. So I'm not concerned. Currencies go up and down," said Sheikh Salman, who runs the Economic Development Board, which oversees economic strategies.
He noted the world has experienced difficulties surrounding the US economy in the past but growth of Asian emerging countries are cushioning the damage this time.
"The main difference of course this time is that we have India and China rising. So the projections are that the world economy will grow by 4%," he said.
Bahrain is on a drive to restructure state firms ahead of planned privatisation and overhaul the labour market to give more jobs to Bahrainis over foreigners who make up about a third of the kingdom's population.
But analysts say the crown prince and his father's uncle Sheikh Khalifa bin Salman Al-Khalifa - prime minister for more than 35 years - are split over reforms and vision for the country's future.
In a rare display of royal disharmony, Bahrain's King Hamad bin Isa Al-Khalifa warned in January the government should not delay reforms led by the crown prince.
Sheikh Salman said on Saturday more needed to be done.
"I'm never completely satisfied, otherwise I will stop the reform process so one has to be always a little bit more ambitious and we have many ideas to pursue."
On the overall economy, Sheikh Salman expected growth of 7% this year, in line with the previous few years. (Reuters)
http://www.arabianbusiness.com/509269-no-revaluation-bahrain-insists
Kuwait pegs dinar to basket of currencies
KUWAIT CITY (Thomson Financial) - Kuwait on Sunday pegged its dinar to a basket of international currencies after more than four years of linking the local currency to the dollar, in a bid to reduce inflationary pressures.
The oil-rich emirate had historically pegged the dinar to a basket of currencies before pegging it to the dollar in January 2003 in preparation for single currency in Gulf Cooperation Council states planned for 2010.
The value of the dinar immediately jumped from 289.14 fils to the dollar to 288.01 fils on the news. There are 1,000 fils in one Kuwaiti dinar.
Central Bank (other-otc: CHPA.PK - news - people ) governor Sheikh Salem Abdul Aziz al-Sabah said in a statement quoted by the state-run KUNA news agency that a sharp decline in the dollar's value had a negative impact on the Kuwaiti economy in the past two years.
Kuwaiti economist Hajjaj Bukhdour said the decision will help reduce 'imported inflation.'
Sheikh Salem reiterated Kuwait's commitment to plans for a single currency among the six members of the GCC.
Bukhdour said Kuwait's measure reflected difficulties faced by the alliance to achieve their target by 2010, especially after Oman had announced it will not be able to meet the target date.
tf.TFN-Europe_newsdesk@thomson.com
http://www.forbes.com/markets/feeds/afx/2007/05/20/afx3739653.html
afp/hjp
The oil-rich emirate had historically pegged the dinar to a basket of currencies before pegging it to the dollar in January 2003 in preparation for single currency in Gulf Cooperation Council states planned for 2010.
The value of the dinar immediately jumped from 289.14 fils to the dollar to 288.01 fils on the news. There are 1,000 fils in one Kuwaiti dinar.
Central Bank (other-otc: CHPA.PK - news - people ) governor Sheikh Salem Abdul Aziz al-Sabah said in a statement quoted by the state-run KUNA news agency that a sharp decline in the dollar's value had a negative impact on the Kuwaiti economy in the past two years.
Kuwaiti economist Hajjaj Bukhdour said the decision will help reduce 'imported inflation.'
Sheikh Salem reiterated Kuwait's commitment to plans for a single currency among the six members of the GCC.
Bukhdour said Kuwait's measure reflected difficulties faced by the alliance to achieve their target by 2010, especially after Oman had announced it will not be able to meet the target date.
tf.TFN-Europe_newsdesk@thomson.com
http://www.forbes.com/markets/feeds/afx/2007/05/20/afx3739653.html
afp/hjp
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