UAE decision favours single GCC currency
Khaleej Times - 01/01/2008
(MENAFN - Khaleej Times)The decision by the UAE government to retain the dirham peg to the US dollar demonstrates its commitment to achieving a GCC monetary union, according to a note by UAE-based firm HC Brokerage. GCC monetary union had been slated to come into effect by 2010, but the deadline has been extended indefinitely.
"The UAE is very dedicated to achieving a GCC monetary union, which was evident in its decision of not de-pegging its dirham from the US dollar," the note states. Speculation about a possible currency de-pegging has driven the dirham up to a 17-year high and increased pressure on the peg.
And although the note acknowledges the success of the fixed exchange rate system for attracting foreign investors and "maintaining stability in the market," HC Brokerage advocates the need for a more independent monetary policy.
"The GCCs/UAE's path and that of the US has recently diverged, restraining monetary policy instruments from controlling escalating inflation in the UAE," it says. While also noting the official claim that skyrocketing house prices is the main reason for the high rate of inflation and that officials in Dubai are trying to find ways to tackle this problem, HC Brokerage states: "It is important to note that without free monetary instruments it is difficult to control inflation especially since last year's (2006) 15 per cent ceiling set on Dubai rent rates did not stop prices going up."
However, the report concedes: "Economic growth is growing at unprecedented rates and even with high inflation rate many foreign investors are still showing interest. The UAE attracts the largest amount of foreign direct investment (FDI) in the GCC. Officials are not resting on their laurels and are still working on facilitating and encouraging foreign investments in the country like foreign ownership in the UAE."
But recent figures show "that some other GCC economies seem to be catching eyes, with FDI increasing at higher rates than that of the UAE," comments the brokerage firm. "The GCC attracts only 3.9 per cent of the FDI invested in the world."
Saturday, April 26, 2008
Thursday, April 10, 2008
GCC Currency Forum 2008 (Dubai, U.A.E.)
GCC Currency Forum 2008 (Dubai, U.A.E.)
Arabian Banking & Finance is delighted to announce the launch of GCC Currency Forum 2008 on June 2008 at Madinat Jumeirah, Dubai, U.A.E.
An established and respected magazine, "Arabian Banking & Finance" provides news, data and in-depth analysis for the region’s finance professionals, while also illustrating the latest trends and product developments within the industry. Every issue highlights the key stories of the month from across the region, identifying the current ‘hot’ topics and predicting their market impact. "Arabian Banking & Finance' is truly a mirror of the regional Finance industry".
The current debate on the GCC’s unified currency has proverbially stirred the hornet's nest. What is the rationale for the proposed unified currency? What basket of currencies ought to be used as the reference peg? Will the peg be a narrow or wide band, the first causing the currency to be overvalued in times of oil trade surpluses, while the latter inviting speculative pressure? Would domestic borrowing, as a certain percentage of GDP, be a major factor in determining who strays in or out of the unified GCC currency, or would other factors such as population be taken into consideration? How would a unified currency restrict national monetary and fiscal policies? Kuwait's move to peg the Dinar to a basket of currencies in flagrant violation of the stated dollar peg, Oman's recalcitrant attitude coupled with an unequivocal statement that meeting the GCC monetary union criteria may have a negative impact on its development plan.
Sticking to entrenched official stated positions is not helpful in this matter, as individual countries might break ranks and catch other GCC members by surprise as Oman and Kuwait have done. Economic policies, and specifically monetary policies, should follow and react to current realities
Whether the GCC unified currency comes about by 2010 or later is not the main issue now. The actions of Oman and Kuwait have brought to the surface fundamental questions of policy implication that need to be addressed and openly debated.
Looking forward to meeting you at the GCC Currency Forum 2008 on June 2008.
Arabian Banking & Finance is delighted to announce the launch of GCC Currency Forum 2008 on June 2008 at Madinat Jumeirah, Dubai, U.A.E.
An established and respected magazine, "Arabian Banking & Finance" provides news, data and in-depth analysis for the region’s finance professionals, while also illustrating the latest trends and product developments within the industry. Every issue highlights the key stories of the month from across the region, identifying the current ‘hot’ topics and predicting their market impact. "Arabian Banking & Finance' is truly a mirror of the regional Finance industry".
The current debate on the GCC’s unified currency has proverbially stirred the hornet's nest. What is the rationale for the proposed unified currency? What basket of currencies ought to be used as the reference peg? Will the peg be a narrow or wide band, the first causing the currency to be overvalued in times of oil trade surpluses, while the latter inviting speculative pressure? Would domestic borrowing, as a certain percentage of GDP, be a major factor in determining who strays in or out of the unified GCC currency, or would other factors such as population be taken into consideration? How would a unified currency restrict national monetary and fiscal policies? Kuwait's move to peg the Dinar to a basket of currencies in flagrant violation of the stated dollar peg, Oman's recalcitrant attitude coupled with an unequivocal statement that meeting the GCC monetary union criteria may have a negative impact on its development plan.
Sticking to entrenched official stated positions is not helpful in this matter, as individual countries might break ranks and catch other GCC members by surprise as Oman and Kuwait have done. Economic policies, and specifically monetary policies, should follow and react to current realities
Whether the GCC unified currency comes about by 2010 or later is not the main issue now. The actions of Oman and Kuwait have brought to the surface fundamental questions of policy implication that need to be addressed and openly debated.
Looking forward to meeting you at the GCC Currency Forum 2008 on June 2008.
A golden alternative to the dollar
A golden alternative to the dollar
By Peter Cooper on Wednesday, April 9 , 2008
The UAE Central Bank is now to be saying that there is no chance of a revaluation of the dirham before a GCC currency union in 2010. Logically anybody who has been holding dirhams hoping for a revaluation to correct the 37 per cent loss in value since 2002 should now be looking for an alternative.
Step forward gold, and in particularly the timely news that the Dubai Multi Commodities Centre and World Gold Council is about to launch a shariah-compliant gold ETF. What is that some might ask?
Essentially this is a certificate backed by gold deposited in Dubai by the DMCC and in London by HSBC. The Dubai gold will be held in a giant vault under the Almas Tower in the DMMC’s new headquarters in New Dubai. It will also be the first ETF in the world to be fully Shariah-compliant, something likely to be very attractive for Islamic financial institutions and retail customers who prefer Islamic banks.
Once the Dubai Financial Services Authority has given its approval, the world’s newest gold ETF will be traded on the DIFX just like any other share. This easy liquidity and the absence of storage is a reason why gold ETFs have become popular among global savers, and the Dubai version joins nine others listed on stock markets worldwide.
The unique selling point for Dubai exchange-traded gold shares is that they will be Shariah-compliant. The DMCC has recently taken a stake in London-listed Shariah Capital that will be taking care of this compliance.
Chief Shariah Officer Shaykh Yusuf Talal DeLorenzo told Emirates Business that anybody buying the Dubai gold ETF could be sure that an actual bar of physical hold was held on their account in the DMCC vault. In short, all gold will be held in physically allocated form. No other ETF can give this physical guarantee and it makes the Dubai gold ETF unique.
Other gold ETFs have been known to use futures contracts to meet sudden surges in buying, and financial techniques that would not meet strict Islamic standards. But the main reason for buying the gold ETF is for protection against the devaluation of the US dollar and, therefore, the UAE dirham.
It is a matter of statistical fact that gold and the US dollar move in opposite directions. If the dollar goes down, then gold goes up and vice-versa; and as the dollar has sunk towards $1.60 to the euro, the price of gold has recently surged above $1,000 an ounce.
Now with some analysts now seriously suggesting the US dollar will fall to $1.65 this October, and bullion experts targeting $1,200 an ounce for gold at some point this year, this might not be a bad time to be investing in gold, and the Dubai gold ETF is an attractive new way to do it. It is all well for the governor of the UAE Central Bank to argue the US dollar rose for a decade until 2002 and has now been falling for three-and-a-half years. But who is to say this decline is about to come to a halt and reverse?
The Fed continues to pump more liquidity into the US economy, precisely the same medicine that caused the decline in the US dollar in the first place. Indeed, by devaluing the dollar, the US is exporting its economic troubles to other countries and spreading its pain.
There will come a point when these trading partners begin to buckle under the strain. The pound sterling could be an early casualty. But in a real US dollar crash the greenback could head much lower, and there is presently no sign of an end to falling house prices which caused the US sub-prime crisis.
The new Dubai gold ETF will form an integral part of the World Gold Council’s $24.2bn family of ETF products around the world. At the end of March, 806 tonnes of gold worth was held in these ETFs and more than $1bn a day was traded in gold ETFs.
This is clearly a timely new financial product, and it will appeal to the retail investor who wants to buy as little as one-10th of an ounce of the yellow metal, right up to Islamic financial institutions buying gold by the tonne.
But as an insurance policy against dollar weakness and global financial instability, there is nothing better than gold, and this is hardly a new commodity to Dubai, already dubbed “The City of Gold”. Last year Dubai imported 559 tonnes of gold and handled around 10 per cent of the global gold trade.
The price of gold also has considerable potential upside. Merely to return to its inflation-adjusted high of 1980 the gold price would have to hit $2,400 an ounce, and few commentators argue gold is about to top out anytime soon. Perhaps it makes more sense to put your money into gold than keeping it in dirhams in the hope of a revaluation.
Related Articles
No revaluation, says Al Suwaidi
Dollar fall may lead to dirham revaluation
UAE minister faces questioning on revaluation
GCC fears loss from currency revaluation
More in Opinion
Pop out for a near-death experience
US Treasury in protectionist mode?
Economic threat that haunts UAE
Take note: lenders hate unpleasant surprises
P&O debacle was a blessing in disguise
Sovereignty can save oceans from being fished out
Investing in a climate for change
Be bold – hold the new IPOs
Public offerings on the DIFX to be keenly watched
No signs yet that economic train heading for crash
Last Update at 7:42 pm on April 9, 2008
By Peter Cooper on Wednesday, April 9 , 2008
The UAE Central Bank is now to be saying that there is no chance of a revaluation of the dirham before a GCC currency union in 2010. Logically anybody who has been holding dirhams hoping for a revaluation to correct the 37 per cent loss in value since 2002 should now be looking for an alternative.
Step forward gold, and in particularly the timely news that the Dubai Multi Commodities Centre and World Gold Council is about to launch a shariah-compliant gold ETF. What is that some might ask?
Essentially this is a certificate backed by gold deposited in Dubai by the DMCC and in London by HSBC. The Dubai gold will be held in a giant vault under the Almas Tower in the DMMC’s new headquarters in New Dubai. It will also be the first ETF in the world to be fully Shariah-compliant, something likely to be very attractive for Islamic financial institutions and retail customers who prefer Islamic banks.
Once the Dubai Financial Services Authority has given its approval, the world’s newest gold ETF will be traded on the DIFX just like any other share. This easy liquidity and the absence of storage is a reason why gold ETFs have become popular among global savers, and the Dubai version joins nine others listed on stock markets worldwide.
The unique selling point for Dubai exchange-traded gold shares is that they will be Shariah-compliant. The DMCC has recently taken a stake in London-listed Shariah Capital that will be taking care of this compliance.
Chief Shariah Officer Shaykh Yusuf Talal DeLorenzo told Emirates Business that anybody buying the Dubai gold ETF could be sure that an actual bar of physical hold was held on their account in the DMCC vault. In short, all gold will be held in physically allocated form. No other ETF can give this physical guarantee and it makes the Dubai gold ETF unique.
Other gold ETFs have been known to use futures contracts to meet sudden surges in buying, and financial techniques that would not meet strict Islamic standards. But the main reason for buying the gold ETF is for protection against the devaluation of the US dollar and, therefore, the UAE dirham.
It is a matter of statistical fact that gold and the US dollar move in opposite directions. If the dollar goes down, then gold goes up and vice-versa; and as the dollar has sunk towards $1.60 to the euro, the price of gold has recently surged above $1,000 an ounce.
Now with some analysts now seriously suggesting the US dollar will fall to $1.65 this October, and bullion experts targeting $1,200 an ounce for gold at some point this year, this might not be a bad time to be investing in gold, and the Dubai gold ETF is an attractive new way to do it. It is all well for the governor of the UAE Central Bank to argue the US dollar rose for a decade until 2002 and has now been falling for three-and-a-half years. But who is to say this decline is about to come to a halt and reverse?
The Fed continues to pump more liquidity into the US economy, precisely the same medicine that caused the decline in the US dollar in the first place. Indeed, by devaluing the dollar, the US is exporting its economic troubles to other countries and spreading its pain.
There will come a point when these trading partners begin to buckle under the strain. The pound sterling could be an early casualty. But in a real US dollar crash the greenback could head much lower, and there is presently no sign of an end to falling house prices which caused the US sub-prime crisis.
The new Dubai gold ETF will form an integral part of the World Gold Council’s $24.2bn family of ETF products around the world. At the end of March, 806 tonnes of gold worth was held in these ETFs and more than $1bn a day was traded in gold ETFs.
This is clearly a timely new financial product, and it will appeal to the retail investor who wants to buy as little as one-10th of an ounce of the yellow metal, right up to Islamic financial institutions buying gold by the tonne.
But as an insurance policy against dollar weakness and global financial instability, there is nothing better than gold, and this is hardly a new commodity to Dubai, already dubbed “The City of Gold”. Last year Dubai imported 559 tonnes of gold and handled around 10 per cent of the global gold trade.
The price of gold also has considerable potential upside. Merely to return to its inflation-adjusted high of 1980 the gold price would have to hit $2,400 an ounce, and few commentators argue gold is about to top out anytime soon. Perhaps it makes more sense to put your money into gold than keeping it in dirhams in the hope of a revaluation.
Related Articles
No revaluation, says Al Suwaidi
Dollar fall may lead to dirham revaluation
UAE minister faces questioning on revaluation
GCC fears loss from currency revaluation
More in Opinion
Pop out for a near-death experience
US Treasury in protectionist mode?
Economic threat that haunts UAE
Take note: lenders hate unpleasant surprises
P&O debacle was a blessing in disguise
Sovereignty can save oceans from being fished out
Investing in a climate for change
Be bold – hold the new IPOs
Public offerings on the DIFX to be keenly watched
No signs yet that economic train heading for crash
Last Update at 7:42 pm on April 9, 2008
Sunday, April 6, 2008
DJ Qatar Central Bank Gov: GCC To Stick To 2010 Deadline
DJ Qatar Central Bank Gov: GCC To Stick To 2010 Deadline
Saturday, April 05, 2008; Posted: 01:42 PM
DOHA, Apr 05, 2008 (Dow Jones Commodities News Select via Comtex) -- -- The future Gulf Cooperation Council's currency will remain linked to the U.S. dollar and GCC countries are able to meet the 2010 deadline for the GCC monetary union, Qatar's central bank governor said Saturday.
"We have taken a strong initiative in 2001 to link all the currencies to the dollar and we are sticking to it," Governor Abdullah Bin Saud Al Thani told reporters in Doha.
He added Qatar, Saudi Arabia, Kuwait and three other GCC countries could still meet the 2010 deadline.
"All GCC countries are capable of entering the GCC (monetary union) by today," he said, adding that inflation was a key issue for all the six nations. He played down the contribution of the dollar peg by saying he expected inflation to decrease by year-end in Qatar as the government is working hard to relieve it.
"Inflation is due to increased government expenditure," he said, adding that the global rise in commodities such as food, energy and agricultural products were also contributing factors to Qatar's record high inflation which some economists put at 14%.
-By Tahani Karrar, Dow Jones Newswires; +9714 364 4965; tahani.karrar@dowjones.com
(END) Dow Jones Newswires
04-05-08 1342ET
Saturday, April 05, 2008; Posted: 01:42 PM
DOHA, Apr 05, 2008 (Dow Jones Commodities News Select via Comtex) -- -- The future Gulf Cooperation Council's currency will remain linked to the U.S. dollar and GCC countries are able to meet the 2010 deadline for the GCC monetary union, Qatar's central bank governor said Saturday.
"We have taken a strong initiative in 2001 to link all the currencies to the dollar and we are sticking to it," Governor Abdullah Bin Saud Al Thani told reporters in Doha.
He added Qatar, Saudi Arabia, Kuwait and three other GCC countries could still meet the 2010 deadline.
"All GCC countries are capable of entering the GCC (monetary union) by today," he said, adding that inflation was a key issue for all the six nations. He played down the contribution of the dollar peg by saying he expected inflation to decrease by year-end in Qatar as the government is working hard to relieve it.
"Inflation is due to increased government expenditure," he said, adding that the global rise in commodities such as food, energy and agricultural products were also contributing factors to Qatar's record high inflation which some economists put at 14%.
-By Tahani Karrar, Dow Jones Newswires; +9714 364 4965; tahani.karrar@dowjones.com
(END) Dow Jones Newswires
04-05-08 1342ET
Friday, April 4, 2008
UAE inflation affects nation's security
UAE inflation affects nation's security
by Stanley Carvalho on Thursday, 03 April 2008 A member of the United Arab Emirates Federal National Council (FNC), which advises the government, said on Thursday the Gulf state's dollar peg was stoking inflation and fuelling discontent.
Aamer al-Fahim, one of eight members from Abu Dhabi among the FNC's 40 members, said the UAE government should explain to the public why it remains committed to the dollar peg and clarify its course on currency policy.
"We need the government to be transparent in this matter as we do not want our market to be unstable," Fahim told Reuters by telephone. Fahim is also a director of the Abu Dhabi-based family business, the Alfahim Group.
"Inflation has affected many expatriates, consumers and traders," he said. "There have been cases of violence and this affects our security."
The dollar has lost 6.6% of its value against the euro this year alone, making some imports to the Gulf states that peg to the dollar more expensive and remittances to some countries less lucrative.
UAE Minister of State for Finance Ubaid al-Tayer will answer a question from Fahim on the dollar peg before a meeting of the 40-member FNC next week, the body's secretary-general said on Tuesday.
The dollar peg forces the UAE, and most of its neighbours in the Gulf Arab region, to track U.S. interest rate cuts as the United States tries to ward off recession, while Gulf economies surge on a five-fold rise in oil prices since 2002.
"Interest rates are one of the best tools to control inflation but the dirham's peg to the dollar does not allow the UAE to control inflation," Fahim said.
UAE Prime Minister Sheikh Mohammed bin Rashid al-Maktoum said on Tuesday a committee was studying the country's peg to the dollar, though it would be retained for now.
The FNC, which has no legislative powers, is not involved in the committee and has no plan to discuss currency reform, FNC secretary-general Mohammed al-Mazrooei said on Tuesday.
Foreigners, from labourers to bank executives, comprise more than 85% of the UAE population of about 4.5 million. Relatively cheap manual labour from India and other countries has underpinned the country's construction boom. (Reuters)
by Stanley Carvalho on Thursday, 03 April 2008 A member of the United Arab Emirates Federal National Council (FNC), which advises the government, said on Thursday the Gulf state's dollar peg was stoking inflation and fuelling discontent.
Aamer al-Fahim, one of eight members from Abu Dhabi among the FNC's 40 members, said the UAE government should explain to the public why it remains committed to the dollar peg and clarify its course on currency policy.
"We need the government to be transparent in this matter as we do not want our market to be unstable," Fahim told Reuters by telephone. Fahim is also a director of the Abu Dhabi-based family business, the Alfahim Group.
"Inflation has affected many expatriates, consumers and traders," he said. "There have been cases of violence and this affects our security."
The dollar has lost 6.6% of its value against the euro this year alone, making some imports to the Gulf states that peg to the dollar more expensive and remittances to some countries less lucrative.
UAE Minister of State for Finance Ubaid al-Tayer will answer a question from Fahim on the dollar peg before a meeting of the 40-member FNC next week, the body's secretary-general said on Tuesday.
The dollar peg forces the UAE, and most of its neighbours in the Gulf Arab region, to track U.S. interest rate cuts as the United States tries to ward off recession, while Gulf economies surge on a five-fold rise in oil prices since 2002.
"Interest rates are one of the best tools to control inflation but the dirham's peg to the dollar does not allow the UAE to control inflation," Fahim said.
UAE Prime Minister Sheikh Mohammed bin Rashid al-Maktoum said on Tuesday a committee was studying the country's peg to the dollar, though it would be retained for now.
The FNC, which has no legislative powers, is not involved in the committee and has no plan to discuss currency reform, FNC secretary-general Mohammed al-Mazrooei said on Tuesday.
Foreigners, from labourers to bank executives, comprise more than 85% of the UAE population of about 4.5 million. Relatively cheap manual labour from India and other countries has underpinned the country's construction boom. (Reuters)
Sunday, March 30, 2008
GCC monetary union likely to better economies
GCC monetary union likely to better economies
Bahrain Tribune - 13/03/2008
(MENAFN - Bahrain Tribune) Assistant Secretary-General for Economic Affairs at the Arab League, Dr Mohammed Ibrahim Al Tuwaijri, has dismissed the idea that any GCC state would cut its currency link with the US dollar except Kuwait.
He said there were reports that the dollar might recover by March 2009. Talking on the sidelines of the regional meet on GCC policies for using clean fuel for cleaner environment al Tuwaijri said it was not in the interest of GCC states to cut their currency link with the US dollar since this might lead to chaos, especially since all deals and transactions were in carried out in the dollar. Regarding the unified GCC currency, he said all the recent indications showed it would be issued by 2010 in view of the international economic situation such as inflation and recession in the US dollar that reflected negatively on GCC currencies linked to it. He added that the introduction of a unified GCC currency would be one of positive resolutions to better the economic situation.
Minister of Oil and Gas and Head of the National Oil and Gas Authority Dr Abdulhussain Bin Ali Mirza, who opened the regional meet on developing GCC policies to use cleaner fuel for better environment, said: "Bahrain has become the first country in the region to produce low Suplphur Diesel and also jet fuel with less CO2 omissions."
The two-day meeting will discuss issues related to fuel and cars and what has been achieved by the GCC, Middle East and North African countries to improve the quality of fuel through setting standards for vehicles in view of the challenges facing the production of unleaded fuel.
The minister said that international efforts and cooperation were essential to improve the international power scenario including the oil sector to maintain environment through improving petroleum products.
Dr Mirza mentioned a number of projects in the field, including unleaded fuel which has been produced since 2000 at a cost of $7.4 million.
Prime Minister Shaikh Khalifa bin Salman Al Khalifa in December opened a complex to produce unleaded diesel at a cost of $725 million with investment revenue reaching 30 per cent.
"There are a number of similar projects of international standards to maintain environment which would be launched after completing their technical and financial studies."
The Director and Regional Representative of the UN Environment Programme for West Asia Dr Habeeb Al Hobar said an international partnership was essential to tackle the issue.
He hailed the role of international partnership in using natural resources wisely and also the use of cleaner fuel under the sponsorship of the environment programme which, he said,contributed in spreading the use of unleaded fuel.
He also praised the policies and programmes of Arab countries to achieve a cleaner environment, underlining the ability of the GCC states to use unleaded fuel since 2003 in Saudi Arabia, Kuwait and the UAE. Deputy Chairman of the general committee to protect fishery resources, environment and wildlife Dr Ismael Al Madani referred to the increasing number of cars in Bahrain with about nine per cent considered as dangerous from the point of view of traffic and leading to accidents and deaths.
Bahrain Tribune - 13/03/2008
(MENAFN - Bahrain Tribune) Assistant Secretary-General for Economic Affairs at the Arab League, Dr Mohammed Ibrahim Al Tuwaijri, has dismissed the idea that any GCC state would cut its currency link with the US dollar except Kuwait.
He said there were reports that the dollar might recover by March 2009. Talking on the sidelines of the regional meet on GCC policies for using clean fuel for cleaner environment al Tuwaijri said it was not in the interest of GCC states to cut their currency link with the US dollar since this might lead to chaos, especially since all deals and transactions were in carried out in the dollar. Regarding the unified GCC currency, he said all the recent indications showed it would be issued by 2010 in view of the international economic situation such as inflation and recession in the US dollar that reflected negatively on GCC currencies linked to it. He added that the introduction of a unified GCC currency would be one of positive resolutions to better the economic situation.
Minister of Oil and Gas and Head of the National Oil and Gas Authority Dr Abdulhussain Bin Ali Mirza, who opened the regional meet on developing GCC policies to use cleaner fuel for better environment, said: "Bahrain has become the first country in the region to produce low Suplphur Diesel and also jet fuel with less CO2 omissions."
The two-day meeting will discuss issues related to fuel and cars and what has been achieved by the GCC, Middle East and North African countries to improve the quality of fuel through setting standards for vehicles in view of the challenges facing the production of unleaded fuel.
The minister said that international efforts and cooperation were essential to improve the international power scenario including the oil sector to maintain environment through improving petroleum products.
Dr Mirza mentioned a number of projects in the field, including unleaded fuel which has been produced since 2000 at a cost of $7.4 million.
Prime Minister Shaikh Khalifa bin Salman Al Khalifa in December opened a complex to produce unleaded diesel at a cost of $725 million with investment revenue reaching 30 per cent.
"There are a number of similar projects of international standards to maintain environment which would be launched after completing their technical and financial studies."
The Director and Regional Representative of the UN Environment Programme for West Asia Dr Habeeb Al Hobar said an international partnership was essential to tackle the issue.
He hailed the role of international partnership in using natural resources wisely and also the use of cleaner fuel under the sponsorship of the environment programme which, he said,contributed in spreading the use of unleaded fuel.
He also praised the policies and programmes of Arab countries to achieve a cleaner environment, underlining the ability of the GCC states to use unleaded fuel since 2003 in Saudi Arabia, Kuwait and the UAE. Deputy Chairman of the general committee to protect fishery resources, environment and wildlife Dr Ismael Al Madani referred to the increasing number of cars in Bahrain with about nine per cent considered as dangerous from the point of view of traffic and leading to accidents and deaths.
Friday, March 28, 2008
Impact of revaluation on the $$$$ - if it happened
The Middle East May Still Be Considering Dropping Their Dollar Pegs
With the greenback trading near record lows, countries like Qatar and the United Arab Emirates are grappling with rapidly growing import price inflation and accelerated expansion as oil revenues rocket higher. In fact, during the third quarter of 2007, the Qatar Central Bank reported that inflation hit 13.7 percent (Qatar’s fiscal year ends on March 31). Meanwhile, the US Federal Reserve has reduced the federal funds rate by 300bps since September 2007 and the markets continue to price in additional cuts. Clearly, the synergies between the US and Persian Gulf countries have lessened quite a bit, making US monetary policy and more importantly, the US dollar, an uncomfortable fit for many Gulf Cooperation Council members, which includes Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the UAE. As a result, it is not surprising to hear that moving away from a dollar peg has been discussed by many of the GCC countries, but what are their options and how will it affect the US dollar?
Pegging to a Basket of Currencies – Persian Gulf countries like the UAE, Qatar, and Saudi Arabia have a few choices when it comes to shifting their respective currencies from the dollar peg, but they will likely want to go with a method that has been tried and tested by one of the other GCC member countries: Kuwait. In May, Kuwait shifted their currency, the dinar, from a dollar peg to a basket of currencies. While the exact weighting has not been disclosed, the basket likely remains heavily weighted in the greenback, with the remaining portions in the currencies of some of their major trading partners, including Europe, the UK, and Japan. Since the shift, the Kuwaiti dinar has appreciated over 9 percent, indicating that a move to a currency basket is a very feasible option. In the short-term, the announcement of a shift to a currency basket by any of the other GCC members would be detrimental to the greenback, as it would suggest that the country would start to diversify central bank reserves away from the dollar and into assets denominated in the currencies of the basket. There is significant capital at stake, as Saudi Arabia’s foreign currency reserves rose 26 percent in September from last year to $259 billion, while the UAE's reserves surged a whopping 65 percent in June from a year earlier to $43 billion. Furthermore, the risks of a sharp knee-jerk sell-off in the greenback would be exacerbated if a group of GCC members announced that they would all de-peg from the dollar, given the increased reserve diversification prospects.
A One-Off Revaluation – Another option that some of the GCC members may consider is a one-off revaluation, which would maintain the dollar peg, but at a level that reflects an appreciation of the local currency. This is similar to what China did with the yuan in July 2005, when the currency was allowed to appreciate 2.1 percent within a single day. The primary reaction of the greenback was seen as a 2.7 percent drop against the Japanese yen, but the sell-off of the dollar also followed through to a lesser degree of approximately 1 percent against the Euro and British Pound. However, the price action did not carry over into the long term, as the prevailing trends of the pairs eventually took over within a few days. If one or more GCC members chose to implement a one-off revaluation, we would likely see similar results where the US dollar would drop against the majors, though the sharpest moves would likely be against the Euro and British Pound. Nevertheless, with central bank foreign exchange reserves likely to go untouched for the time being, the sentiment may wane rather quickly.
http://www.dailyfx.com/story/topheadline/EUR_USD__Why_US_Dollar_Weakness_1206652408597.html
With the greenback trading near record lows, countries like Qatar and the United Arab Emirates are grappling with rapidly growing import price inflation and accelerated expansion as oil revenues rocket higher. In fact, during the third quarter of 2007, the Qatar Central Bank reported that inflation hit 13.7 percent (Qatar’s fiscal year ends on March 31). Meanwhile, the US Federal Reserve has reduced the federal funds rate by 300bps since September 2007 and the markets continue to price in additional cuts. Clearly, the synergies between the US and Persian Gulf countries have lessened quite a bit, making US monetary policy and more importantly, the US dollar, an uncomfortable fit for many Gulf Cooperation Council members, which includes Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the UAE. As a result, it is not surprising to hear that moving away from a dollar peg has been discussed by many of the GCC countries, but what are their options and how will it affect the US dollar?
Pegging to a Basket of Currencies – Persian Gulf countries like the UAE, Qatar, and Saudi Arabia have a few choices when it comes to shifting their respective currencies from the dollar peg, but they will likely want to go with a method that has been tried and tested by one of the other GCC member countries: Kuwait. In May, Kuwait shifted their currency, the dinar, from a dollar peg to a basket of currencies. While the exact weighting has not been disclosed, the basket likely remains heavily weighted in the greenback, with the remaining portions in the currencies of some of their major trading partners, including Europe, the UK, and Japan. Since the shift, the Kuwaiti dinar has appreciated over 9 percent, indicating that a move to a currency basket is a very feasible option. In the short-term, the announcement of a shift to a currency basket by any of the other GCC members would be detrimental to the greenback, as it would suggest that the country would start to diversify central bank reserves away from the dollar and into assets denominated in the currencies of the basket. There is significant capital at stake, as Saudi Arabia’s foreign currency reserves rose 26 percent in September from last year to $259 billion, while the UAE's reserves surged a whopping 65 percent in June from a year earlier to $43 billion. Furthermore, the risks of a sharp knee-jerk sell-off in the greenback would be exacerbated if a group of GCC members announced that they would all de-peg from the dollar, given the increased reserve diversification prospects.
A One-Off Revaluation – Another option that some of the GCC members may consider is a one-off revaluation, which would maintain the dollar peg, but at a level that reflects an appreciation of the local currency. This is similar to what China did with the yuan in July 2005, when the currency was allowed to appreciate 2.1 percent within a single day. The primary reaction of the greenback was seen as a 2.7 percent drop against the Japanese yen, but the sell-off of the dollar also followed through to a lesser degree of approximately 1 percent against the Euro and British Pound. However, the price action did not carry over into the long term, as the prevailing trends of the pairs eventually took over within a few days. If one or more GCC members chose to implement a one-off revaluation, we would likely see similar results where the US dollar would drop against the majors, though the sharpest moves would likely be against the Euro and British Pound. Nevertheless, with central bank foreign exchange reserves likely to go untouched for the time being, the sentiment may wane rather quickly.
http://www.dailyfx.com/story/topheadline/EUR_USD__Why_US_Dollar_Weakness_1206652408597.html
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