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Bloomberg/ Gulf News (UAE)UAE and Qatar 'could dump peg in six months'
Bloomberg
Published: December 18, 2007, 22:59
Dubai: The UAE and Qatar may opt to change their fixed exchange rates to the US currency in the next six months, according to Citigroup.
The members of the Gulf Cooperation Council may abandon a link to the dollar and move to a basket of currencies, or adjust the value of the pegs higher by 5 per cent to 10 per cent, Citigroup's emerging-markets strategy team wrote in a report. Saudi Arabia is less likely to consider a change, according to the world's third-largest trader of foreign exchange.
"The first option appears to make the most sense to us, but it is not clear that this will be the preferred route," the New York-based bank's 2008 trading strategy report said. "Any change in currency regime could either happen unilaterally or multilaterally."
The Gulf nations, which supply at least a fifth of the world's oil, are under pressure to rethink their foreign-exchange policies as the dollar tumbled 8.2 per cent against the euro this year.
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