GCC peg decision only after monetary union

The UAE and its partners in the six-nation Gulf Co-operation Council (GCC) will decide on whether to keep the dollar peg or switch to a basket of currencies after they launch their landmark monetary union, a GCC official said yesterday.

Nasser Al Qaoud, GCC Assistant Secretary-General for Economic Affairs, denied there were any obstacles blocking the creation of the long-awaited monetary union and said there were efforts to launch it on time in 2010.

Quoted by Qatari official media after two days of GCC talks on the monetary union in Doha, he said the link between most of the GCC currencies have allowed member states to find a common peg to stabilise their currency exchange rates pending the creation of a single currency.

"The GCC leaders have decided the dollar should be the common peg for their currencies at this stage. Once we reach the single currency, the GCC Central Bank will determine the exchange rates and decide whether they should remained pegged to the dollar, euro or basket of currencies," he said.

Qaoud said the planned monetary union, which will be the first in the Middle East, would involve a "Monetary Council" and a "GCC Central Bank".

"We hope the single currency will be approved on time in 2010… all efforts are now concentrating on the realisation of this goal on schedule," he said.

"Any delay or postponement for technical or other reasons will be up to the GCC heads of state when they meet later this year. As for inflation, I don't think this problem poses any obstacle for the creation of the GCC monetary union."

Except for the Kuwaiti dinar, the currencies of the five other GCC countries are pegged to the US dollar.

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