Dollar peg will not help inflation June 2, 2008
Posted by mylastresort in analysis, qatar, rumors, saudi arabia.Tags: Abu Dhabi, currency, Dirham, Doha, Dollar, Gulf, Henry Paulson, inflation, Pegs, qatar, Riyal, Treasury Secretary, uae, US
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According to U.S. Treasury Secretary Henry Paulson abandoning the Gulf’s currency pegs to the dollar will not solve their vexing inflation problems. Speaking to reporters on his plane from Qatar to UAE, Paulson said the Gulf rulers in the region have… “quite an awareness that the peg does not influence inflation to a significant degree… They recognize that inflation is the overriding issue. Ending the peg is not the solution to the inflation problem.”
Economic policy is not a politcal decision that can be altered via public relations, it is a sovereign matter. Paulson stated that he could not rule out any moves by Gulf states to abandon their peg’s.
Kuwaiti Dinar at record strength against US Dollar May 25, 2008
Posted by mylastresort in analysis.Tags: Central Bank of Kuwait, Currencies, currency, forex, kuwait, Kuwaiti Dinar, KWD, Record, US Dollar, USD
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The Kuwaiti Dinar (KWD) has reached record strength against the US Dollar (USD) reaching .26490 fils per US $1.00 on Sunday.
Why the single Gulf currency will not happen… April 7, 2008
Posted by mylastresort in analysis, bahrain, qatar, saudi arabia.Tags: Arab Gulf, currency, Dinar, Doha, gcc, Gulf currency, Meeting, Single, Union
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Following the central bankers meeting in Doha this week its clear they are all enthusiastic and confident in the 2010 unified Gulf currency, known as the ‘Dinar’. The expected time frame for the single currency is on the extreme side of optimism, (also note, I am very skeptical that a single currency will be adopted in the first place). There are many obstacles that must be overcome before discussing a unified currency. The Gulf, although neighbors, do not share the same political veiws, economic reform or civil freedoms, among many other factors that will be of prime importance to the unification of the currencies.
Final day of Gulf Arab meetings April 7, 2008
Posted by mylastresort in analysis, bahrain, qatar, saudi arabia.Tags: Abdullah bin Saud al-Thani, Central Bank, currency, Dinar, Dirham, Doha, gcc, Governors, kuwait, Meeting, qatar, Riyal, saudi arabia, Single, uae, Union
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Since today is the last day of the highly anticipated meeting of the Gulf Arab states many rumors have risen as to the future of the currency union of 2010. The meeting will conclude today in the Qatari capital of Doha. A statement by Sheikh Abdullah bin Saud al-Thani reiterated the Gulf’s commitment to a single currency, the same optimism is shared with all the member countries.
“There are plans by all competent institutions in the GCC to achieve that goal by that date… We set 2010 for the monetary union and we are still sticking to this date.”
- Sultan Nasser al-Suweidi, The United Arab Emirates central bank governor
Rumors that the Qatari Riyal and the UAE Dirham would be revalued were obviously dismissed by the governors” at the meeting. Any slight indication of a revaluation from the governors will spark a mass speculative attack on the currency forcing the central banks to reform. (more…)
Gulf Arab inflation expected at 8% in 2008 April 1, 2008
Posted by mylastresort in analysis, bahrain, qatar, rumors, saudi arabia.Tags: Arab, Asia, bahrain, Bank, Cap, currency, Dinar, Director, Dirham, Dollar, Federal Reserve, Gulf, IMF, inflation, Inflation Report, International Monetary Fund, kuwait, Lending, Level, Liquidity, Middle East, Mohsen Khan, oman, Peg, qatar, Rental, Riyal, Saudi, saudi arabia, uae
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The International Monetary Fund (IMF) has stated that it expected the average Gulf Arab inflation levels to increase in 2008 to 8% from 7% in last year. Inflation has been a major problem in the Gulf arab region with migrants workers protesting and import prices increasing due to the dollar peg by Arab countries. As the US Dollar loses value the Gulf countries are forced to lower rates in succesion to the US’s Federal Reserve.
“The inflation rate in the Gulf was around 7 percent last year and we expect it to be seven to eight percent this year… On the demand side, there is a big push to expand government spending and liquidity is high in the system, which means people have more access to liquidity and more access to spending power”
- Mohsen Khan, IMF director of the ME
Qatar lowers interest rate March 23, 2008
Posted by mylastresort in analysis, bahrain, qatar, saudi arabia.Tags: analysis, Appreciation, bahrain, Bank, Basis point, CBB, CBK, Central Bank, Countries, Currencies, currency, Cut, Depeg, Dove, economy, FED, Federal Reserve, Food, Gulf, inflation, kuwait, oman, Peg, Products, qatar, Qatari, Qatari Riyal, Rate cuts, Rent, Revaluations, saudi arabia, speculation
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Qatar has just announced a rate cut of 75 bp (basis points) on its depository facility rate to 2.25%. Thus far Saudi Arabia, Bahrain and now Qatar have been forced to lower their rates, despite rising inflation, to match the Fed cuts made in the previous week.
Annual inflation in Qatar has risen to 13.74% in December 2007. The second highest rate on record as food and rent costs surged in the economy. The Gulf central banks are torn between efforts to fight inflation and prevent appreciation of their dollar pegged currencies.
Speculation on the Gulf currencies revaluation has been seen to increase as inflationary pressures push the countries in to rapid reformation of their monetary policies. As of now the Qatari Riyal forward contract is has appreciated 3.9% to 3.4989 per dollar in a year.
New Bahrain bank notes to come March 15, 2008
Posted by mylastresort in analysis.Tags: ATM, bahrain, Bahraini, Bank notes, BHD, Central Bank of Bahrain, currency, Design, New notes
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As previously reported the new Bahraini bank notes are coming into circulation. The Central Bank of Bahrain (CBB) announced today that the new notes will be coming into circulation from March 17, 2008. The new notes will be in the same denominations and no change is expected to the coins. The CBB is working with local banks to coordinate a process of introducing the new notes via ATMachines to begin dispensing the new bank notes at 12:01 am on the 17th.
Qatar to keep Riyal peg, for now March 13, 2008
Posted by mylastresort in analysis, qatar.Tags: analysis, bahrain, banking, currency, currency pegs, economy, forex, gcc, inflation, kuwait, news reports, qatar, Qatari Central Bank Governor, saudi arabia, Sheikh Abdullah bin Saud al-Thani, speculation, subprime, uae
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According the Qatari central bank governor, Sheikh Abdullah bin Saud al-Thani, Qatar will keep its currency pegged to the dollar at the same rate for now. The oil producer is grappling with near-record level inflation and speculators waiting for the QAR to apprectiate.
”The view of the Central Bank of Qatar until the moment is: there is no change in policy about depegging from the dollar… We are still pegging the riyal against the dollar and we will continue at the moment… I want to emphasise that we are still fixed against the dollar and we will continue pegging our currency against the dollar at the moment…”- Sheikh Abdullah bin Saud al-Thani, Qatari Central Bank Governor
For the past months the Qatari prime minister, finance minister and an economic advisor to the Emir have all spoken in favor of currency reform mainly to fight a 13.74% reported in 4th Quarter 2007. Qatar said this month it would freeze rents for two years on many housing contracts and the country is also considering introducing subsidies on some commodities to fight inflation.
