No Plan to Drop Dollar Peg: Riyadh
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No Plan to Drop Dollar Peg: Riyadh
Shilo Sat Jan 30, 2010 11:18 pm
January 31, 2010 · Posted in NEWS
January 30, 2010
Dubai: Saudi Arabia, the Arab world’s largest economy, has no plans to drop the riyal’s peg to the US dollar as it has served its economy very well, the kingdom’s central bank governor told the CNN in an interview broadcast yesterday.
“The dollar peg has served our interests very well since 1986 and there is no emotional attachment to it. It is basically self-interest,” Mohammad Al Jasser, the governor of the Saudi Arabian Monetary Authority, or Sama, told CNN.
The riyal’s peg to the greenback, which has been under pressure in recent months, forces the kingdom to shadow the monetary policy of the US Federal Reserve despite high inflation, higher growth projections and different credit conditions.
Inflation rises
Annualised inflation in the world’s biggest oil exporter accelerated for the second consecutive month in December to 4.2 per cent from 4 per cent the previous month due to rising home rents and import costs, data from the Central Department of Statistics and Information showed on Tuesday.
Al Jasser said 100 per cent of the kingdom’s exports as well 70 per cent of its imports are dollar-denominated, making the US currency a better foreign exchange regime.
“In the past and in the present and probably for the foreseeable future, the dollar has served our economy very well, but never say never,” Al Jasser said, adding that the country could consider other options if economic conditions were to change.
Last month, a Gulf monetary union agreement, which was ratified by Saudi Arabia, Kuwait, Qatar and Bahrain, took effect and a monetary council was set up to decide on the peg of a proposed single currency and time line to launch it.
The monetary union project, which has been in the works since 2001, has been dogged by delays and debates over technical issues such as the currency peg.
Kuwait complicated plans for the currency when it broke ranks in 2007 and de-pegged its dinar from the US dollar to a basket of currencies to fight soaring inflation.
The UAE, the second-largest Arab economy, pulled out from the project in May. The UAE is the second state in the six-nation Gulf Cooperation Council to abandon the monetary union plan after Oman in 2006.
http://gulfnews.com/business/economy/no-plan-to-drop-dollar-peg-riyadh-1.575750
January 30, 2010
Dubai: Saudi Arabia, the Arab world’s largest economy, has no plans to drop the riyal’s peg to the US dollar as it has served its economy very well, the kingdom’s central bank governor told the CNN in an interview broadcast yesterday.
“The dollar peg has served our interests very well since 1986 and there is no emotional attachment to it. It is basically self-interest,” Mohammad Al Jasser, the governor of the Saudi Arabian Monetary Authority, or Sama, told CNN.
The riyal’s peg to the greenback, which has been under pressure in recent months, forces the kingdom to shadow the monetary policy of the US Federal Reserve despite high inflation, higher growth projections and different credit conditions.
Inflation rises
Annualised inflation in the world’s biggest oil exporter accelerated for the second consecutive month in December to 4.2 per cent from 4 per cent the previous month due to rising home rents and import costs, data from the Central Department of Statistics and Information showed on Tuesday.
Al Jasser said 100 per cent of the kingdom’s exports as well 70 per cent of its imports are dollar-denominated, making the US currency a better foreign exchange regime.
“In the past and in the present and probably for the foreseeable future, the dollar has served our economy very well, but never say never,” Al Jasser said, adding that the country could consider other options if economic conditions were to change.
Last month, a Gulf monetary union agreement, which was ratified by Saudi Arabia, Kuwait, Qatar and Bahrain, took effect and a monetary council was set up to decide on the peg of a proposed single currency and time line to launch it.
The monetary union project, which has been in the works since 2001, has been dogged by delays and debates over technical issues such as the currency peg.
Kuwait complicated plans for the currency when it broke ranks in 2007 and de-pegged its dinar from the US dollar to a basket of currencies to fight soaring inflation.
The UAE, the second-largest Arab economy, pulled out from the project in May. The UAE is the second state in the six-nation Gulf Cooperation Council to abandon the monetary union plan after Oman in 2006.
http://gulfnews.com/business/economy/no-plan-to-drop-dollar-peg-riyadh-1.575750
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