Gulf monetary union deal finalised

UAE Central Bank Governor Sultan bin Nasser Al Suwaidi says the draft will be presented in Jeddah. (SALEM KHAMIS)

Gulf Arab central bankers "more or less" finalised a monetary union deal this week that will be presented to finance ministers in September, the United Arab Emirates central bank governor said on Thursday.

The draft agreement that will pave the way for Saudi Arabia and four of its neighbours to launch a single currency is "more or less final, except for some typing errors", Sultan Nasser Al Suwaidi told reporters in Dubai.

His comments confirmed those of Naser Al Kaud, deputy assistant secretary-general for the Gulf Cooperation Council (GCC) secretariat, made to Reuters after a meeting of central bankers in Doha.

Central bankers agreed at the meeting to create the nucleus of a joint central bank – a monetary council – next year but signalled that a new common currency would not be in circulation by an agreed 2010 target.

Suwaidi declined to comment on whether Gulf states would be able to meet a 2010 deadline for circulating the single currency. He warned earlier in the week that skyrocketing prices had led to disagreements about the launch.

Qatar Central Bank Governor Sheikh Abdullah said after Monday's meeting: "2010 will be the date for the creation of a monetary council or a monetary authority for the Gulf Cooperation Council countries."

"We are not talking about the currency," he later told Reuters.

Central bankers and finance ministers would hold a joint meeting in Jeddah, Saudi Arabia, in September, to take a final look at the deal, Suwaidi said.

Gulf Arab rulers are expected to sign the agreement at their meeting in November, Salim Al Gudhea, head of the monetary union unit at the GCC Secretariat, said this week.

The GCC, a loose economic and political bloc, also includes the UAE, Kuwait, Qatar, Bahrain and Oman. Oman has said it would not to join monetary union.

Gulf states this year gave a renewed push toward achieving monetary union in the face of mounting pressure on their dollar-pegged currencies as investors bet one or more Gulf states could revalue to help fight record inflation.

Suwaidi once again reiterated the UAE's commitment to maintaining its dirham's peg to the dollar at the same rate.