Gulf currency to cut costs
A leading international rating agency, Fitch, has said the Gulf common currency, expected in 2010, will help reduce prices of essential commodities in the Gulf Cooperation Council states. The use of a common GCC Cooperation Council for the Arab States of the Gulf currency will reduce the member states' cost of global trade transactions to a great extent, the Fitch said in a report, adding that companies and consumers would benefit as a result of fall in prices.
Charles Seville, an associate director of Fitch who prepared the report, said the common currency would give GCC Cooperation Council for the Arab States of the Gulf countries greater flexibility in dealing with external pressure.
"When the prices of oil go up, the value of the currency will also go up," Al-Eqtisadiah business daily quoted him as saying. Seville also observed that GCC Cooperation Council for the Arab States of the Gulf countries with a common religion and heritage are in a good position to establish a currency union that will boost their economies. "A flexible currency will help the GCC Cooperation Council for the Arab States of the Gulf adopt monetary policies that are suitable to the region's situation," he said.
The report came ahead of a meeting of the governors of GCC Cooperation Council for the Arab States of the Gulf central banks, to be held in Doha tomorrow.
Secretary-General Abdul Rahman Al-Attiyah, will discuss the group's basic monetary law. GCC Cooperation Council for the Arab States of the Gulf leaders are likely to endorse the law during their upcoming summit in Muscat.
GCC Cooperation Council for the Arab States of the Gulf countries have decided to introduce a common Gulf currency at the beginning of 2010. All member countries except Oman have agreed to establish the currency union as scheduled but Oman wants more time. The currency union will reduce inflation rates in GCC Cooperation Council for the Arab States of the Gulf countries.
Research will rise further in the absence of effective policy tools to prevent it. Inflation is already in double digits in Oman, Qatar and the UAE and close to 10 percent in Kuwait and Saudi Arabia, leaving only Bahrain with a modest inflation rate of around five percent.
"The Gulf inflation is at its highest in over 30 years. "As in the seventies, some of the region's increased oil wealth is feeding through into higher prices, and with policy tools limited, inflation will rise further before it starts to fall," said Richard Fox, head of Middle East and Africa Sovereign Ratings.
Inflation in Saudi Arabia and Oman has been more affected by rising food prices. With at least some commodity prices now moderating and housing costs less of a factor, inflation may abate later this year, one analyst said. By contrast, in Qatar and UAE, lower inflation must await improved property supply.
Deciding on exchange rates for the new currency when it is introduced could be a major sticking point if inflation in the region remains as high and erratic as it has been in recent months. Valuing a new currency against existing currencies is difficult if the relative values of the existing currencies are constantly in flux.
Fitch considers the upsurge in inflation the biggest threat to the single currency project timetable. Seville hoped that improved real estate supply, moderation in food prices and more restrained government spending would start to reduce inflation later this year.
/Arab News /
Charles Seville, an associate director of Fitch who prepared the report, said the common currency would give GCC Cooperation Council for the Arab States of the Gulf countries greater flexibility in dealing with external pressure.
"When the prices of oil go up, the value of the currency will also go up," Al-Eqtisadiah business daily quoted him as saying. Seville also observed that GCC Cooperation Council for the Arab States of the Gulf countries with a common religion and heritage are in a good position to establish a currency union that will boost their economies. "A flexible currency will help the GCC Cooperation Council for the Arab States of the Gulf adopt monetary policies that are suitable to the region's situation," he said.
The report came ahead of a meeting of the governors of GCC Cooperation Council for the Arab States of the Gulf central banks, to be held in Doha tomorrow.
Secretary-General Abdul Rahman Al-Attiyah, will discuss the group's basic monetary law. GCC Cooperation Council for the Arab States of the Gulf leaders are likely to endorse the law during their upcoming summit in Muscat.
GCC Cooperation Council for the Arab States of the Gulf countries have decided to introduce a common Gulf currency at the beginning of 2010. All member countries except Oman have agreed to establish the currency union as scheduled but Oman wants more time. The currency union will reduce inflation rates in GCC Cooperation Council for the Arab States of the Gulf countries.
Research will rise further in the absence of effective policy tools to prevent it. Inflation is already in double digits in Oman, Qatar and the UAE and close to 10 percent in Kuwait and Saudi Arabia, leaving only Bahrain with a modest inflation rate of around five percent.
"The Gulf inflation is at its highest in over 30 years. "As in the seventies, some of the region's increased oil wealth is feeding through into higher prices, and with policy tools limited, inflation will rise further before it starts to fall," said Richard Fox, head of Middle East and Africa Sovereign Ratings.
Inflation in Saudi Arabia and Oman has been more affected by rising food prices. With at least some commodity prices now moderating and housing costs less of a factor, inflation may abate later this year, one analyst said. By contrast, in Qatar and UAE, lower inflation must await improved property supply.
Deciding on exchange rates for the new currency when it is introduced could be a major sticking point if inflation in the region remains as high and erratic as it has been in recent months. Valuing a new currency against existing currencies is difficult if the relative values of the existing currencies are constantly in flux.
Fitch considers the upsurge in inflation the biggest threat to the single currency project timetable. Seville hoped that improved real estate supply, moderation in food prices and more restrained government spending would start to reduce inflation later this year.
/Arab News /
1 comment:
"When the prices of oil go up, the value of the currency will also go up", says Charles Seville.
As this poster said here on 05 May, 2008,
under the 04 May, 2008, article
Experts to bring the Euro perspective to the Gulf:
Once the world will be allowed to know that the past three decades of cheap Arabian oil have been made possible by the flow of cheap gold to the Saudi Arabia oil-central bank, then most will start to understand what the GOLD EURO really means. […] Oil and gas for euro simply because the euro is evolving into the GOLD EURO, through the European Central Bank marking its gold reserves to market.- end of quote
Advocating the marking of gold reserves to market is arguing that the accurate price of gold reserves can only be found through the actual price of gold on the gold market.
The opposite of marking to market is marking to model.
Marking to model is marking on the basis of assumptions, marking on the basis of guesswork.
Will the Gulf Arab Gulf Arab monetary union mark its oil reserves to market, and thus not to model,
so that, as Charles Seville is saying, when the prices of oil go up, the value of the Gulf Currency will also go up?
Will this be the first step towards pricing oil in the GOLD GULF CURRENCY which will be freely exchangeable with other currencies which mark their gold reserves to market, such as the gold euro?
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