Aix-en-Provence, France: Bahrain is committed to maintaining its exchange rate peg to the US dollar, the governor of the Central Bank of Bahrain said yesterday, while at the same time continuing talks with several states of the Arabian Gulf region to achieve monetary union.
"We are going to maintain this peg as this is the best way to serve our economy," Rasheed Al Maraj, the governor of the Central Bank of Bahrain, told Dow Jones Newswires in an interview yesterday on the sidelines of an economic conference in Aix-en-Provence, southern France.
Bahrain argues that it needs to maintain a dollar peg to reflect that its economy is open to the outside world, with external trade representing more than double its gross domestic product.
Asked whether Bahrain would consider following China's lead, which indicated recently it would slightly relax the peg between the yuan and the US dollar and let its currency rise gradually, Al Maraj said: "The exchange peg reflects the nature of our economy. ... What other countries do reflects the nature of their economy."
The governor of the Central Bank of Bahrain also said that talks between several countries of the Gulf region to achieve monetary union are progressing, dismissing suggestions that the project has been shelved due to disagreement between governments in the area.
The monetary union has been approved by four states in the region — Bahrain, Saudi Arabia, Qatar and Kuwait — Al Maraj said, adding a monetary council has been set up in charge of implementing a monetary union agreement between these four countries.
