Qatar denies Gulf states' plan to discuss currency revaluation

Dubai: Qatar denied a report that Gulf region central bank representatives will consider currency revaluation when they meet next week.

The meeting is a regular, scheduled event to discuss technical aspects of monetary union and won't be attended by any central bank governors, a Qatar central bank official said.

The committee meets four times a year and will be discussing the formation of a Gulf central bank and other technical matters related to a proposed single currency, the official said, declining to be identified because of bank policy.

A local daily reported earlier yesterday that central bank officials from the six Gulf Cooperation Council states, including Saudi Arabia and the UAE, will discuss dropping their currencies' pegs to the dollar.

Gulf states are under pressure to revalue their currencies after the dollar fell 10 per cent against the euro last year and the US Federal Reserve began cutting interest rates to ward off a recession. The weaker dollar has made imports from Europe more expensive, stoking record inflation across the region.

Gulf central bank governors will have the first of two meetings this year in Doha, Qatar, in the first week of April.

Currency revaluation is "still on the agenda," said Caroline Grady, an econ-omist with Deutsche Bank. "We expect the UAE and Qatar to move to a basket later this year. The question of when is always difficult." Qatari Prime Minister Shaikh Hamad Bin Jasem Bin Jaber Al Thani said in January that he was considering dropping the riyal's peg to the dollar or revaluing the nation's currency to help stem inflation.

Abandoning the riyal's peg is a political decision and would take several months to implement if approved, the Qatari official said yesterday.

The UAE currency's peg to the dollar is "contributing" to record inflation, UAE Minister of Economy Sultan Bin Saeed Al Mansouri said here yesterday.

Inflation in the UAE probably rose to 9.8 per cent in 2007, according to a Bloomberg survey of economists, up from 9.3 per cent in 2006. Qatar has the region's highest inflation, which remained at 13.7 per cent in the fourth quarter.

Kuwait became the first Gulf Arab state to drop its currency's peg to the dollar in May, linking the dinar to a basket of currencies that also includes the euro, the yen and the British pound.