Time 'Running Short' For Single Gulf Currency

May 23, 2007
Gulf Cooperation Council wants single currency by 2010.

Saudi Arabia warned last week that time was running out for the planned launch of a single Gulf currency in 2010, after Oman said it would not join and Kuwait de-pegged its currency from the dollar. "It is true that the time now is short and we need exceptional efforts to achieve" monetary union and single currency by 2010, the head of the Saudi Arabian Monetary Agency, Hamad al-Sayari, told a banking conference in Kuwait.

Leaders of the Gulf Cooperation Council states decided at a ummit in 2001 to launch a monetary union and single currency by 2010.

The plan has however met with a number of snags regarding technical, legislative and fiscal policies required for the planned union between the six GCC states. Oman's central bank governor Homud al-Zidjali announced at the banking conference the sultanate had decided not to take part in the planned single currency. "Our decision is not to participate in the Gulf monetary union... because we do not want to restrict our monetary and fiscal policies at present," he said.

Recently, Kuwait 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. Senior economists and analysts said Kuwait's move made it highly unlikely the GCC would be able to fulfill its hope for a single currency by the 2010 target date.

The GCC groups Bahrain, Kuwait, Oman, Qatar, the United Arab Emirates (UAE) and Saudi Arabia.

Copyright Agence France-Presse, 2007

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