BIG WAVE
04-16-2007, 03:08 PM
London: Gulf currencies weakened yesterday with the Saudi riyal at a two-month low a versus the dollar as regional central banks reiterated their commitment to existing currency pegs, sending speculative flows into reverse.
A meeting of central bank governors in Saudi Arabia ended on Tuesday with their agreeing to maintain currency policy in the face of market pressure to loosen pegs to the falling dollar.
The executive president of Oman's central bank said the agreement to keep the peg system was informal and had not been formally discussed during the meeting.
"Informally the governors agreed that everything will stay as it is," Hamood Sangour Al Zadjali told Reuters.
Speculation about a currency revaluation had gathered pace before the meeting but banks have moved to quash these bets, with Kuwait and the UAE cutting interest rates in recent days. Kuwait also cut the coupon on its benchmark bonds, making the assets less attractive to speculators.
"The currencies are weakening because all the speculative flows were positioned for a revaluation, then over the past week we have had several signals that the Gulf currencies will not revalue," said Koceila Maames, economist at Calyon in Paris.
http://archive.gulfnews.com/articles/07/04/05/10115992.html
A meeting of central bank governors in Saudi Arabia ended on Tuesday with their agreeing to maintain currency policy in the face of market pressure to loosen pegs to the falling dollar.
The executive president of Oman's central bank said the agreement to keep the peg system was informal and had not been formally discussed during the meeting.
"Informally the governors agreed that everything will stay as it is," Hamood Sangour Al Zadjali told Reuters.
Speculation about a currency revaluation had gathered pace before the meeting but banks have moved to quash these bets, with Kuwait and the UAE cutting interest rates in recent days. Kuwait also cut the coupon on its benchmark bonds, making the assets less attractive to speculators.
"The currencies are weakening because all the speculative flows were positioned for a revaluation, then over the past week we have had several signals that the Gulf currencies will not revalue," said Koceila Maames, economist at Calyon in Paris.
http://archive.gulfnews.com/articles/07/04/05/10115992.html