Riyal pegged to basket of currencies ideal to drive capital market: AnalystThe Peninsula - 23 March, 2010
The Qatari riyal pegged to a basket of currency rather than pushing for a common currency in the GCC states will be ideal to drive the country’s capital market, according to a senior Standard Chartered Bank analyst.
Marios Maratheftis, Standard Chartered Regional Head of Research for the Middle East, North Africa and Pakistan Global Markets, suggested it could be good for Qatar to manage its currency in a way that it drives its own capital market.
Citing Singapore as a model of most open economy, Maratheftis told local journalists in a press conference yesterday that the opening of basket of currency in that country is working well and could remain resilient even if worst economic crisis hits.
“You need to introduce flexibility and depreciate bias,” Maratheftis, however, noted this in his thoughts about how an open basket of currency can be good for Qatar to have a sustainable economy, specially that its growth among GCC countries has been fastest last year and continue to maintain it this year.
He suggested pegging just two to three currencies would be good as this has been doing well with Singapore and the idea for GCC countries seeking a single currency would take five to ten years to achieve it much more would not be possible if it is pegged to the US dollar.
“We should not wait for a common currency, it is easier to have the right institution and policies in place,” Maratheftis said adding that economic prospects in the GCC remain bright since it outperformed into 3.5 percent last year.
Richard Stykes, Standard Chartered Global Markets business and Co-Head of the Wholesale Banking business in Qatar, said the Middle East is increasingly becoming a strategic region for their bank because of its positive economic outlook.
“We will be more active here,” Stykes said.
