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