[mattduke]

Gulf Arab oil producers are considering revaluing their dollar-pegged currencies together and will hold talks on a change in the exchange rates "in the next few days", Bahrain's foreign minister said on Saturday.

Saudi Arabia and five neighbors preparing for monetary union as early as 2010 ruled out dropping pegs to the tumbling dollar after a summit last week and said any talks on revaluation would be kept secret.

Reuters

[seahorse]

I don't see how this can possibly be positive for the dollar.

[mattduke]

[DantesPeak]

The GCC is trying to keep discussions secret for many reasons - such as not making it appear they are conspiring against the US, excess speculation by currency traders could force countries to take action, etc.

$this->bbcode_second_pass_quote('', 'G')ulf revaluation talks due in days: Bahrain FM
Sunday, December 09, 2007

MANAMA: Gulf Arab policymakers will meet within days to discuss currency revaluations after the oil producing region’s rulers agreed to keep exchange rates pegged to the weakened dollar, Bahrain’s foreign minister said on Saturday.

Other Gulf state’s preparing with Bahrain for monetary union as early as 2010 have declined to say whether they are considering revaluation after agreeing at a summit last week to keep any reform talks secret, to avoid stirring market speculation.

Since the summit, the United Arab Emirates central bank has backtracked on its appeal for an end to Gulf dollar-pegs and last week ruled out any change in currency policy for “the foreseeable future”.

Currency revaluations are being considered, although states with dollar pegs have agreed to keep them in place, Bahraini Foreign Minister Sheikh Khaled bin Ahmed al-Khalifa told Reuters on the sidelines of a conference in Manama. “That’s being discussed between the central banks and there will be a meeting between the ministers of finance and the central bank governors in the next few days,” he said, when asked about revaluations.

Sheikh Khaled, a member of the ruling family, declined to say where the meeting would take place. “That will not really change a lot. It will not mean a big change.” he said.

His version of Gulf currency diplomacy tallies with details given by a source familiar with Saudi foreign exchange policy who told Reuters last month Riyadh was willing to consider its first revaluation in 21 years to keep monetary union alive.

Any revaluation would be “small” and would be carried out in tandem with other Gulf states, the source said, ruling out severing the riyal’s peg to the dollar.