Qatar’s Minister of Economy and Finance HE Yousef Hussein Kamal attending the GCC finance ministers meeting in Kuwait yesterday Sunday - 7/11/2010
Weak dollar not a concern for Gulf, say Saudi, Kuwait
Finance ministers from Saudi Arabia, the Middle East’s biggest economy, and Kuwait said yesterday they are not concerned over the impact of a weakening US dollar on the economies of the Gulf Co-operation Council (GCC), states.
“No,” Saudi Arabia’s Finance Minister, Ibrahim al-Assaf told reporters in Kuwait City, where GCC finance and economy ministers, and central bank governors are meeting this weekend, when asked if there is any concern over the declining dollar on GCC economies.
Kuwaiti Finance Minister Mustafa al-Shamali echoed his Saudi counterpart, replying “no, never” when asked about possible concerns for regional economies over the weaker greenback.
A falling dollar has given rise to speculation that GCC states, all of which peg their currencies to the greenback except Kuwait, may be pushed to revalue their currencies as inflationary pressures increase and income from dollar-priced oil exports is being eroded.
However, al-Shamali said there weren’t any concerns over inflation in the region at present.
“We (Kuwait and the GCC) are not worried about the current inflation rates and they have not reached a worrying level. When it reaches that level we will, of course, react,” al-Shamali said without providing further details.
The GCC comprises six regional states-Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain and Oman.
The dollar’s trade-weighted index fell to a new 2010 low of 75.794 on Thursday, with both the euro and the pound rising to nine-month highs against the US currency, after the US Federal Reserve’s decision to provide another $600bn of quantitative easing between now and the middle of next year.
However, the greenback recovered some ground on Friday after nonfarm payrolls surprised to the upside, reversing some of the losses suffered in the wake of the Fed’s latest stimulus plan.
UAE Central Bank governor Sultan al-Suweidi said in October that his country was happy with the currency link and has no plans to change its monetary regime.
“We have had very good experience most of the time with the dollar peg since the early 1970s,” al-Suweidi said at the time. “We have no plans to break the dirham peg to the dollar despite all the pressures.” Meanwhile, GCC Secretary General HE Abdurrahman bin Hamad al-Attiyah said GCC finance ministers and central bank governors will discuss a Bahraini proposal to establish a fund to support financial stability in the region.
The fund will also look at economic development in the region, al-Attiyah said in a speech read at a meeting in Kuwait City.
Al-Shamali also said banks in the GCC states should merge in a bid to establish entities with more solid financial foundations.
“Kuwait has the same view of the GCC that lenders in the region should merge to become stronger and bigger financial institutions. The GCC believes it is very, very important to have more solid financial entities,” he told Zawya Dow Jones.
Al-Shamali said that Kuwait, a member of the Organisation of Petroleum Exporting Countries, was mulling an increase in its budget to fund development projects in the oil-rich state.
http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=396873&version=1&template_id=48&parent_id=28
Finance ministers from Saudi Arabia, the Middle East’s biggest economy, and Kuwait said yesterday they are not concerned over the impact of a weakening US dollar on the economies of the Gulf Co-operation Council (GCC), states.
“No,” Saudi Arabia’s Finance Minister, Ibrahim al-Assaf told reporters in Kuwait City, where GCC finance and economy ministers, and central bank governors are meeting this weekend, when asked if there is any concern over the declining dollar on GCC economies.
Kuwaiti Finance Minister Mustafa al-Shamali echoed his Saudi counterpart, replying “no, never” when asked about possible concerns for regional economies over the weaker greenback.
A falling dollar has given rise to speculation that GCC states, all of which peg their currencies to the greenback except Kuwait, may be pushed to revalue their currencies as inflationary pressures increase and income from dollar-priced oil exports is being eroded.
However, al-Shamali said there weren’t any concerns over inflation in the region at present.
“We (Kuwait and the GCC) are not worried about the current inflation rates and they have not reached a worrying level. When it reaches that level we will, of course, react,” al-Shamali said without providing further details.
The GCC comprises six regional states-Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain and Oman.
The dollar’s trade-weighted index fell to a new 2010 low of 75.794 on Thursday, with both the euro and the pound rising to nine-month highs against the US currency, after the US Federal Reserve’s decision to provide another $600bn of quantitative easing between now and the middle of next year.
However, the greenback recovered some ground on Friday after nonfarm payrolls surprised to the upside, reversing some of the losses suffered in the wake of the Fed’s latest stimulus plan.
UAE Central Bank governor Sultan al-Suweidi said in October that his country was happy with the currency link and has no plans to change its monetary regime.
“We have had very good experience most of the time with the dollar peg since the early 1970s,” al-Suweidi said at the time. “We have no plans to break the dirham peg to the dollar despite all the pressures.” Meanwhile, GCC Secretary General HE Abdurrahman bin Hamad al-Attiyah said GCC finance ministers and central bank governors will discuss a Bahraini proposal to establish a fund to support financial stability in the region.
The fund will also look at economic development in the region, al-Attiyah said in a speech read at a meeting in Kuwait City.
Al-Shamali also said banks in the GCC states should merge in a bid to establish entities with more solid financial foundations.
“Kuwait has the same view of the GCC that lenders in the region should merge to become stronger and bigger financial institutions. The GCC believes it is very, very important to have more solid financial entities,” he told Zawya Dow Jones.
Al-Shamali said that Kuwait, a member of the Organisation of Petroleum Exporting Countries, was mulling an increase in its budget to fund development projects in the oil-rich state.
http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=396873&version=1&template_id=48&parent_id=28
