Kuwaiti Finance Minister has said that the Gulf Cooperation Council countries, U.A.E., Qatar and Bahrain specifically, are planning to scrap their currencies peg to dollar soon.
Mustafa Al Shimali is confident that other Middle Eastern countries will be doing what Kuwait has done in May 2007. Recently financial officials from the United Arab Emirates stated that depegging is not in the countrys interest, while the commission was established to analyze the possible consequences of such decision.
The U. S. dollar, which is the base currency for the whole GCC region, except Kuwait, dropped 13% against the euro in the last 12 months. Depreciating dollar is believed to be a reason for the elevated inflation rate in the region.
Yesterday U. A.E., Qatar and Bahrain followed the Feds decision to lower the rates to stay pared with the U.S. dollar lending rates they decreased national rates from 2.25% to 2%. Saudi Arabia chose not to follow the decision, spurring the riyals growth on the Forex market.
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