GCC Finance Chiefs, Bank Governors to Meet Amid High Inflation, Weak Dollar

[darock0116]

GCC Finance Chiefs, Bank Governors to Meet Amid High Inflation, Weak Dollar

Arab News Team
JEDDAH, 26 October 2007 — The Gulf Cooperation Council (GCC) ministers of finance and economy and central bank governors will hold their 74th meeting here tomorrow and are scheduled to review a number of topics pertaining to joint economic cooperation, SPA news agency website said yesterday.
The meeting comes amid surging inflation in the region, which analysts say are due to weak dollar, among others.
Observers said that the meeting will also touch on the timetable for a single currency plan which has been dragging on for some time.
Kuwait has already reneged on a pledge made with the other five members to keep its currency pegged to the tumbling dollar to prepare for monetary union. Divisions among the other five over inflation targets at the last meeting of policymakers fired intense market speculation that they would follow, observers said.
With the dollar at record lows, regional inflation at decade highs and central banks facing the prospect of tracking more US interest rate cuts, the central bank governors and finance ministers will be hard pressed to maintain a united front at the meeting tomorrow and Sunday, analysts said.
“Divergence is already occurring in fighting inflation and interest rate policies,” said Koceilas Maames, African and Middle East Economist at Calyon Bank in London.
“I believe this divergence will continue with forex policy and we will be watching for signals of change in the exchange rate regime,” he said.
The monetary union deadline began slipping when Oman opted last year not to join by 2010.
Kuwait broke ranks with its neighbors and adopt a basket of currencies in May.
A single currency is unlikely even by 2015, United Arab Emirates central bank governor said in remarks published this month.
“A statement announcing delay...would be read as evidence that the Gulf states are preparing to adopt more independent responses to the increasingly acute challenges they are facing,” HSBC Middle East economist Simon Williams said in Dubai.
“Rising inflation, dollar weakness, low US rates are having a direct impact on the real economy and the market will be watching the meeting for signs of their response,” he said.
Apart from Kuwait, the Gulf states agree that allowing their currencies to appreciate against US is not an option for now. At the last meeting of central bank governors in Saudi Arabia last month, they could agree about little else.
The six said they would fashion separate responses to any US interest rate cut.
When the Federal Reserve cut rates on Sept. 18, Saudi Arabia, Oman and Bahrain declined to follow, choosing to ride out pressure on their currencies rather than stoke inflation at home. The Saudi riyal hit a 21-year high on the news. Qatar and UAE, the two countries with the region’s highest inflation rates, cut some key rates along with Kuwait, to help deter bets on currency appreciation.
With the US economy faltering after the mortgage-market meltdown, the 50-basis point cut on Sept.18 is unlikely to be a one-off test of the Gulf’s commitment to dollar-pegged exchange rates.
Central bankers of UAE and Qatar have repeatedly ruled out a unilateral revaluation as have the Saudis, Bahrainis and Omanis.
“I think there are discussions on doing this multilaterally,” Marios Maratheftis, regional head of research at Standard Chartered Bank, said.
“Long term, it does make more sense to have a peg to a basket of currencies rather than the dollar.”
The Federal Reserve is expected to cut US interest rates again by another 25 basis points next week in an effort to bolster the economy. That perspective can provide some support for the currency on the calculation that a stronger economy will ensure the dollar remains an attractive investment proposition.


http://www.arabnews.com/?page=6&section=0&article=101795&d=26&m=10&y=2007

[DareDevil1]

Iraq wasn't specified in this article...hope thats a good thing...

[mab71]

Some more news.
Gulf States faces the risk of losing a bet on the market disengagement linking their currencies to the dollar exchange rate is given to the most vulnerable among them a reference to the disagreement on the monetary policy during a meeting in Jeddah next Saturday, aims to discuss the date set for achieving monetary union is 2010.

وقالت السعودية والدول الأخرى الأعضاء بمجلس التعاون إنه سيكون من الصعب بل قد يكون من المستحيل, تحقيق هذا الهدف في الموعد المحدد.

It said Saudi Arabia and other Member States Cooperation Council, it would be difficult, but it may be impossible, to achieve this goal on schedule.

وقد نكثت الكويت بتعهدها بالالتزام بالإبقاء على العملات الخليجية مربوطة بالدولار المترنح للإعداد للاتحاد النقدي المقترح.

Kuwait has reneged on its pledge to maintain the commitment Gulf currencies tied to the dollar Staggerer to prepare for monetary union proposal.

لكن الاختلافات التي ظهرت بين الدول الخمس الأخرى الأعضاء بالاتحاد في الاجتماع الأخير لرؤساء البنوك المركزية أذكت تكهنات بأن الدول الأخرى قد تحذو حذو الكويت وتفك ربط عملاتها بالدولار.

But differences emerged among the five other members of the Union at the recent meeting of the heads of central banks rekindled speculation that other nations may follow the example of Kuwait and the siege linking their currencies to the dollar.

وفيما يستمر انخفاض سعر صرف الدولار الأميركي أمام العملات العالمية الأخرى, يرتفع معدل التضخم إلى أعلى مستوى في عقد كامل بدول الخليج بينما تواجه البنوك المركزية ضرورة اقتفاء آثر قرار الاحتياطي الاتحادي الأميركي بخفض سعر الفائدة على عملاتها.

With continued low exchange rate for the American dollar currencies other global brings the inflation rate to the highest level in a decade Gulf States while facing central banks need to trace the American Federal Reserve decision to reduce interest rates on their currencies.

وسيجد وزراء المالية ورؤساء البنوك المركزية في اجتماعهم في جدة يومي الأحد والاثنين القادمين أنفسهم أمام ضغوط للمحافظة على موقف موحد.

Find finance ministers and heads of central banks at their meeting in Jeddah on Sunday and Monday arrivals themselves to the pressures of maintaining a unified position.

تغيير قريب

Change soon

وقال المحلل الاقتصادي لشؤون الشرق الأوسط في بنك كاليون بلندن إن الاختلاف ظاهر في سياسة دول الخليج بالنسبة لكيفية مكافحة التضخم والتعامل مع أسعار الفائدة.

He said economic analyst on the Middle East in London that the Bank Kallion apparent difference in the policy of the Gulf states for how to combat inflation and to deal with interest rates.

وتوقع حدوث تغيير بالنسبة لنظام صرف العملات الخليجية قريبا.

He expected a change for the system of currency exchange Gulf soon.

وقد واجه الموعد المحدد للاتحاد النقدي احتمال التأجيل منذ أعلنت عُمان العام الماضي أنها لن تستطيع الانضمام للاتحاد عام 2010.

Having faced a deadline for monetary union possibility of a postponement since Oman announced last year that it would not be able to join the Union in 2010.

أما الكويت فقد عزت قرارها بفك ربط عملتها بالدولار إلى تأخر دول الخليج في اتخاذ قرار حاسم بشأن الاتحاد النقدي.

The Kuwait has attributed its decision divorcing the currency's peg to the dollar late in the Gulf states to take a decisive decision on monetary union.

وقال محافظ البنك المركزي الأوروبي للإمارات مؤخرا إنه لن تكون هناك إمكانية لتحقيق وحدة نقد خليجية قبل 2015.

The governor of the European Central Bank signs recently that there would be no possibility of achieving unity before the 2015 Gulf criticism.

كما أشار محافظو البنوك المركزية بقطر والبحرين والسعودية إلى أنه سوف يكون من الصعب تحقيق الوحدة في موعدها المحدد.

He also pointed central bank governors, Qatar, Bahrain and Saudi Arabia that will be difficult to achieve unity in a timely fashion.

وباستثناء الكويت, فإن الدول الخليجية الأخرى متفقة على أنها لن تسمح في الوقت الحالي لعملاتها بالارتفاع مقابل الدولار.

With the exception of Kuwait, the other Gulf States agreed that it would not give in this time of the rise of their currencies against the dollar.

خيارات صعبة

Difficult choices

وعندما خفض الاحتياطي الاتحادي أسعار الفائدة على الدولار يوم 18 سبتمبر/أيلول قررت السعودية وعُمان والبحرين ألا تحذو حذوه، واختارت مواجهة الضغوط على عملاتها على زيادة التضخم.

When the Federal Reserve reduced interest rates for the dollar on September 18 decided to Saudi Arabia, Oman and Bahrain only follow suit, and chose the face of pressures on their currencies to increase inflation.

وارتفع سعر صرف العملة السعودية إلى أعلى مستوى لها في 21 عاما.

Rose Saudi currency exchange rate to the highest level in 21 years.

لكن قطر والإمارات حيث أعلى نسبة تضخم بالمنطقة بالإضافة إلى الكويت، خفضت بعض أسعار الفائدة لوقف التكهنات بشأن ارتفاع عملاتها.

But Qatar and the Emirates, where the highest rate of inflation in addition to the Kuwait region, some reduced interest rates to stop speculations on the rise of their currencies.

وبينما تلقي أزمة القروض العقارية بظلالها على الاقتصاد الأميركي فإن رفع نسبة الفائدة على الدولار يوم 18 سبتمبر/أيلول الماضي لن تكون الأخيرة.

While receiving crisis mortgage shadow on the American economy, lifting the interest rate on the dollar on September 18 last will be the last.

وتوقع محللون خفضا آخر للفائدة بمقدار نصف نقطة مئوية بحلول نهاية الربع الأول من العام القادم, بما في ذلك ربع نقطة مئوية هذا العام.

The analysts expect another reduction of interest by half a percentage point by the end of the first quarter of next year, including a quarter percentage point this year.

http://translate.google.com/translat...263A915524.htm