Kuwait: Rethink on US Dollar peg urged

[TexasLawyer]

REGIONAL FX HEADLINES Friday, November 25, 2005

Kuwait: Rethink on US Dollar peg urged

Kuwait City: Kuwait should stop pegging its dinar currency to the US dollar because rising US interest rates are pushing up local borrowing costs and hurting the Kuwaiti economy, a leading legislator said.

Parliament's finance and economic committee chairman Youssef Al Zalzalah attacked the dollar peg, saying he preferred linking the dinar to a basket of currencies, a policy Kuwait abandoned in 2002.

"Pegging the dinar to the dollar is not a sound policy. Pegging the dinar to a basket of currencies was better," Al Zalzalah said, confirming comments reported by local media. The dollar's long decline against the euro over the past three years raised pressure for an end to currency pegs in the GCC states.

http://www.middleeastforex.com/index.php?section=94

[daleo]

1. Kuwait's very existence is pegged to the U.S. military

So I think they will stick to the U.S. dollar as well.

[AndyTiedye]

2. The US and the Dollar Can Be Criticized for Many Things...

...but too-high interest rates are not one of them.

Interest rates are well below the real rate of inflation.

[lovuian]

3. Everybody wants to abandon the dollar because of the debt

Bush has placed on the country!!!

[Mika]

4. Bushco will invade Kuwait just like he did to Iraq. n/t