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.
Oman inflation figures April 13, 2008
Posted by mylastresort in analysis.Tags: CPI, February, January, oman, Omani, Riyal
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Omani inflation has shown that the annual inflation rate has increased, in February, to 11.11% from 10.12% in January. The jump was mainly driven by 19.6% jump in ‘food and beverage’ costs. A rise in rent was reported at 14.1%. The Gulf countries have all the warning signs readily available to them to act NOW in an attempt to save their economies from an apparently impeding crisis.
Single Currency: The biggest influence, Saudi Arabia April 7, 2008
Posted by mylastresort in analysis, saudi arabia.Tags: Dollar, economy, gcc, Gulf, Influence, Peg, Riyal, saudi arabia
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I view the Gulf countries as each dealing with their own dilemma regarding the unified currency, but on the forefront would be the Kingdom of Saudi Arabia, for the following reasons:
- Biggest, most influential country in the GCC
- Radical influence of Islam (preventing the country from flourishing)
- Uncontained inflation
- Non-existent political reform
- Fixed US Dollar peg, with no expectation of revaluation
- Weak economical agenda
The actions of the Saudi monarchy govern not only their peoples, but influence the entire Gulf. Any actions by the monarchy, or demands, will be more than likely be granted by the smaller Gulf neigbors. Basic commodity prices rose approximatley 20-25% this month in Saudi Arabia, regulations have remained poorly maintained, rather than resolving the problems, government interventions seem to be cycling the problems to other sectors in the economy.
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 currency reform meeting today April 6, 2008
Posted by mylastresort in analysis, bahrain, qatar, saudi arabia.Tags: Arab, Central Banks, Dirhan, Governers, Gulf, oman, qatar, Reform, Riyal, saudi arabia, Single currency, uae
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The Gulf central bank governers last meeting was six months ago. In the meeting the governers decided not to revalue their currencies in anticipation of a single currency union (plan of 2010). Since their meeting:
- UD Dollar has fallen 14% against the Euro
- US Federal Reserve lowered rates 6x
- Inflation in the Gulf has almost doubled
As Saudi Arabia claims that it has no currency reform plans, Qatar and UAE, have publicily announced that they are rethinking their pegs. It will be interesting to see how todays meeting turns out…
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
Mandatory Qatarization in one year March 24, 2008
Posted by mylastresort in analysis, qatar.Tags: Citizenship, Civil Service Minister, economy, Employment, Government mandate, inflation, Jobs, kuwait, Kuwaiti, Kuwaitisation, KWD, Nationalization, Private sector, QAR, Qatari, Qatari Riyal, Qatarization, Rates, Riyal, Sultan Hassan al-Dosari, Work, Workforce
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Qatar has just announced a plan to private and public sector firms with a directive to nationalise 20% of their workforce within a year. This plan comes into effect following Kuwaits mandate of “Kuwaitisation” where 40% of the workforce has already been to citizens. The succesful campaign which ran in Kuwait in the recent years also provided citizens with a government salary in addition to the one recieved by the private companies. The combined salaries lowered the costs to the private companies and improved the efficiency of the workplace. The Qatari plan is for 20% of the workforce to be of Qatari citizenship by March 31, 2009.
“It is our responsibility to provide jobs to unemployed compatriots… There is frustration among the Qatari youth… We are encouraging fellow citizens to take up jobs in the private sector”
- Sultan Hassan al-Dosari, Civil Service Minister
Qatar facts:
- 3rd biggest natural gas reserves in the world
- Population of 1.5 million (less than 1/3 nationals)
- Relies heavily on foriegn labor
- Record high inflation rates
- Recently lowered rates
- Rumors of revaluation of Qatari riyal or [2]
US Fed slashes rates, Gulf to follow March 19, 2008
Posted by mylastresort in analysis, bahrain, qatar, saudi arabia.Tags: bahrain, Bahrain Central Bank, Benchmark, Central Bank, Dinar, Federal Reserve, Gulf, oman, qatar, Rate cuts, Riyal, saudi arabia, Saudi Arabian Monetary Policy Agency (SAMA), Stagflation, uae, United States, US
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US Fed lowers interest rates by 75 basis points (.75%). Gulf countries pegged to the US dollar must follow the Feds cuts. As of now Saudi Arabia and Bahrain have lowered their rates by the same points. news from UAE, Qatar, and Oman is still pending. (more…)
“We are fixed against the dollar” – Qatar March 18, 2008
Posted by mylastresort in qatar.Tags: Abdullah bin Saud al-Thani, Central Bank Governor, De-peg, De-pegging, gcc, inflation, Interest Rates, Pressure, qatar, Qatari, Revaluation, Riyal, Sheikh, speculation, subprime
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Inline with todays reports of the US lower interest rates Qatar’s Central Bank Governer has talked to the press regarding the heavy speculation on the Qatari Riyal.
“We are fixed against the dollar since 2001 and we will stick to this policy… We are sticking to the policy of no revaluation and sticking to the policy of no change against the dollar… In Qatar, there are a lot of things to fight inflation but the issue of inflation is about government expenditure in all countries, and also the growth which is happening in the GCC”
- Sheikh Abdullah bin Saud al-Thani, Qatari Central Bank Governor
When asked about how Qatar might react to a probable cut in U.S. interest rates on Tuesday, he said:
“At that time, we will look at the liquidity in the market and look at the state of the Qatari economy, and make the decision.”
