Autonomy

and if the UAE is to follow - will there be a mch needed / wanted re-evaluation of the currency / exchange rates...

and if they do will it make a huge difference?

http://www.gulfnews.com/business/Ban.../10126777.html

W10

Word on the street - they want to, and have for ages.

Politically it is tough.

Jammy_Dodgers

I thought they were going to wait until a unified GCC currency is in circulation?

Autonomy

adjust by how much? in the last 12 months the dollar has lost about, what, approx 8% of value, against the pound - how much is the average against other currencies?

politically - tough still - the common currency must be on very shaky ground what with Oman dropping out and Kuwait now breaching the preconditions?

or politically for US relations?

Border Reiver

Must be politically easier now Kuwait have gone ahead. Can anybody explain to a non economist why we have the peg anyway. Is it just to keep the currency of a relatively small economy more stable against other currencies or is there more to it than that? Hong Kong has a peg against the dollar and it isn't a small economy.

W10

Politically - both reasons.

Most people are pretty sure the GCC currency is about as likely to happen as stability in Lebanon.

I think the dollar has lost more than 15% in the past 18 months.

W10

Kuwait has a parliament (a strong one at that).

Autonomy

so the political resoning is being erroded on the common currency front - that leaves the US political aspect.

Economically - there would be reasons to unpeg - though did Saudi and the UAE agree to the peg due to the oil transactions?

Unpegging and adjusting would be great for everyones income in the short term - what about long term? Peg to a basket of currencies, the euro?

W10

Kuwait is pegging to a basket (dollar being primary still though)

however, they have the added advantage of

a, only having pegged in 2003
b, having their reserves in GBP