Oil defeat puts Gulf currency fixed back under microscope – News of Bahrain- DT News

Oil defeat puts Gulf currency fixed back under microscope – News of Bahrain- DT News

Oil defeat puts Gulf currency fixed back under microscope. The defeat in oil prices is throwing the decades-old currency pegs of the Gulf Arab region back under the microscope.. The increase shows how the prospect of declining dollar earnings for the energy-exporting nations of the Gulf makes it more difficult for governments to balance their budgets, pressuring the systems under which they keep their currencies pegged to the dollar.. "What we are seeing now is the initial shock based on oil prices," said Saed Abu Karsh, the co-founder of Dubai-based hedge fund Ark Capital Management.. I don't think there is an immediate risk to the peg, but the risk is for further pressure on the forwards.". While the balance sheets of the six members of the oil-rich Gulf Cooperation Council is weaker than in recent years, public debt is higher and foreign reserves are lower, prices will need to remain depressed for longer for pegs to come under sustained pressure, according to Ziad Daoud, the Dubai-based chief Middle East economist for Bloomberg Economics.. "Many countries can sustain their exchange-rate regimes for a number of years," he said.. Oman's peg may be the most vulnerable because it has less firepower to