Gulf poised to delay monetary union, official says

JEDDAH, Saudi Arabia (Reuters) – Gulf Arab oil producers are likely to postpone a 2010 deadline for monetary union at a meeting of central bankers and finance ministers on Saturday, an official of the region’s economic bloc said.

Investors are watching the meeting in the Saudi Red Sea port city of Jeddah for any signs of a rift on currency policy, which could renew market bets on the demise of a regional exchange-rate regime pegged to the tumbling U.S. dollar.


The International Monetary Fund said Gulf monetary policy needed to be consistent with dollar pegs, after the six-oil producers broke ranks on their response to a U.S. interest rate cut last month, raising speculation about currency revaluations.

Gulf currencies strengthened again on Friday, with the Qatari riyal gaining to its strongest since 2003, as investors bet delays to monetary union plan would prompt central banks to let exchange rates appreciate.

“I think the relationship with the dollar is one alternative,” IMF Managing Director Rodrigo Rato told reporters after meeting Gulf Arab officials in Jeddah.

Reuters