Gulf dinar 'to replace four local currencies
Four Gulf oil producers planning monetary union are expected to name a new common currency the Gulf dinar, a Saudi academic said yesterday. And the new currency will run in tandem with national coins and notes now in circulation to ease the transition, he said.
Wadei Ahmed Kably, economics professor at the King Abdul Aziz University in the Saudi Red Sea Port of Jeddah, said he expected the Gulf dinar to be issued by the Gulf Central Bank and set at SR10, nearly $2.66.
"Based on the European Union experience, I expect the new currency to be circulated along with the existing national currencies in the Gulf Cooperation Council," he told the Saudi Arabic language daily Al Watan."Both currencies will remain in circulation by banks and individuals for one or two years so the public get used to the new currency.
National currencies could then be gradually withdrawn within five years so the public will not feel any difference," he told the paper. Saudi Arabia, the world's largest oil exporter, Kuwait, Qatar and Bahrain are pushing ahead with the monetary union plans following the withdrawal of the UAE and Oman.
GCC officials have not announced the name of the new currency nor its value or peg but they have made clear their currencies would remain pegged to the dollar until a new currency and peg is decided.
Oman pulled out of the scheme in 2007 on the grounds it is not ready yet while the UAE announced last month it was quitting in an apparent protest at the GCC leaders' decision to choose Riyadh as the location of the Gulf Central Bank.
Saudi American Bank (Samba) last week said the UAE pulled out of the proposed union after insisting on hosting the Central Bank and keeping national currencies in circulation.
The currencies of Saudi Arabia, Bahrain and Qatar have long been pegged to the US dollar while Kuwait reverted to a basket of currencies in May 2007 in a bid to tackle soaring inflation, for which it blamed the weakening dollar.
www.business24-7.ae/Articles/2009/6/Page...5a0f83e06203d68.aspx
