Bankers meet to clear final obstacles to single currency

Gulf Arab central bankers will discuss whether to revive the deadline for a single currency and try to remove obstacles facing monetary union at a meeting today, Qatar’s Central Bank governor said on Saturday.

However, Gulf Arab central bankers have no plans to discuss currency reform in the meeting.

Qatar, Saudi Arabia and three other states in the world’s biggest oil exporting region have been trying to negotiate a single currency by 2010, a deadline policy-makers across the Gulf have said would be difficult, if not impossible, to meet.

“Our main objective will be to remove obstacles to monetary union,” Sheikh Abdullah bin Saud Al Thani said in Doha, without being more specific on what those obstacles were.

Central bankers would discuss harmonising payment systems and regulations at their bi-annual meeting today and could possibly recommend a change in the timeline to Gulf Arab rulers when they meet at their annual summit in December, Sheikh Abdullah said.

All Gulf states, except Kuwait, peg their currencies to the US dollar, which tumbled to record lows against the euro and a basket of major currencies last month.

“We will review the timeline and see whether to stay with 2010,” Sheikh Abdullah said. Qatar currently holds the revolving chair of the Gulf Co-operation Council.

Oman threw the single currency project into the disarray in 2006 when it said it would not join by the 2010 deadline. It has since said it will not join at all.

Kuwait also cast doubt on the deadline when it broke ranks with its neighbours and severed its peg to the dollar last May, saying the weak US currency was fuelling inflation by driving up import costs.

Gulf Arab central bankers are also expected to discuss how to control inflation, which is accelerating across the Gulf as the economies surge on a five-fold increase in oil prices, economists including Caroline Grady, regional economist at Deutsche Bank, said last week. (Reuters)