Gulf currency pegs offer silver lining in era of weaker dollar

  • Date: 18-Oct-2020
  • Source: Arabian Business
  • Sector:Financial Markets
  • Country:Gulf
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Gulf currency pegs offer silver lining in era of weaker dollar

More than a decade ago, Gulf Arab nations struggled to preserve their currency pegs as the dollar went into retreat. This time, the link to a sliding greenback may give reassurance.

Back in 2007 and 2008, the weak dollar sent the cost of imports spiralling and allowed inflation to take hold. Now, the sluggish domestic demand has put a lid on price growth, while the dollar declines could give a boost to non-oil industries like tourism once the pandemic eases.

With the exception of Oman, the currency pegs of the six-member Gulf Cooperation Council seem stable for now

Also out of the picture are the inflationary hot-money flows to the region when Brent crude was near $150 12 years ago.

“The decline in the dollar will be positive for the Gulf Cooperation Council (GCC)