Gulf Still Faces Inflation Pressure, Kuwait Says (Update1)
March 24, 2010, 5:52 AM EDT
By Alaa Shahine and Fiona MacDonald
March 24 (Bloomberg) -- Economies in the Gulf Arab states still face some inflationary pressures, Sheikh Salem Abdul Aziz al-Sabah, governor of the Kuwait central bank, said today.
“The inflationary pressures have subsided substantially, but this does not at all mean that they are totally gone,” he said in a speech at a meeting in Kuwait of central bank governors from the six-member Gulf Cooperation Council.
Inflation in the Gulf Arab states has slowed from record highs in 2008, easing speculation that the countries would drop their dollar pegs or revalue their currencies. Kuwait stopped pegging its currency to the dollar 2007 and fixed the exchange rate to a basket of currencies, the only country in the region to alter its policy.
Sheikh Salem also said the region’s financial regulators need “early warning systems” that could help avoid future financial crises. He did not elaborate.
The GCC is a loose political and economic alliance of Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates, and Oman. The first four of those countries are working to create a shared currency that would help them to integrate their economies and pursue a monetary policy independent of the U.S. Oman pulled out of the project in 2007 and the U.A.E., the second-biggest Arab economy, withdrew last year.
Central bank governors from the four prospective members of the new currency will gather in Riyadh, Saudi Arabia next week for the first board meeting of the Monetary Council, a precursor to a regional central bank.
March 24, 2010, 5:52 AM EDT
By Alaa Shahine and Fiona MacDonald
March 24 (Bloomberg) -- Economies in the Gulf Arab states still face some inflationary pressures, Sheikh Salem Abdul Aziz al-Sabah, governor of the Kuwait central bank, said today.
“The inflationary pressures have subsided substantially, but this does not at all mean that they are totally gone,” he said in a speech at a meeting in Kuwait of central bank governors from the six-member Gulf Cooperation Council.
Inflation in the Gulf Arab states has slowed from record highs in 2008, easing speculation that the countries would drop their dollar pegs or revalue their currencies. Kuwait stopped pegging its currency to the dollar 2007 and fixed the exchange rate to a basket of currencies, the only country in the region to alter its policy.
Sheikh Salem also said the region’s financial regulators need “early warning systems” that could help avoid future financial crises. He did not elaborate.
The GCC is a loose political and economic alliance of Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates, and Oman. The first four of those countries are working to create a shared currency that would help them to integrate their economies and pursue a monetary policy independent of the U.S. Oman pulled out of the project in 2007 and the U.A.E., the second-biggest Arab economy, withdrew last year.
Central bank governors from the four prospective members of the new currency will gather in Riyadh, Saudi Arabia next week for the first board meeting of the Monetary Council, a precursor to a regional central bank.