A setback for single currency

Oman bowing out of the Gulf Cooperation Council's planned monetary union isn't a death knell, but it doesn't bode well for the future. Nor is it a good option for Oman in the long run.

Even more concerting is the Saudi Finance Minister's comments that the 2010 deadline for the unified currency is "ambitious".

At the heart of the discussion is the declining dollar, which is not only dragging pegged Gulf currencies down with it, but also taking an increasing bite out of expatriate workers' wallets.

Economists are starting to mumble that various Gulf currencies may decide to repeg their currencies, especially if there are delays in forming the monetary union. And while there are precedents for countries bowing out of monetary unions - much like the United Kingdom and Switzerland decided not to join in the euro zone - Oman can't afford to be left behind.

A report from HSBC Global Research says the nation may end up on the margins of regional development, especially since foreign investors will find it a less attractive place to do business.

While Oman's departure may not leave huge economic ripples behind, it still is a blow to the unified front the GCC has been trying to build.