SYDNEY MORNING HERALD: GULF states, including Saudi Arabia and the United Arab Emirates, could revalue their currencies while maintaining their pegs to the US dollar.
Such a move would probably have the effect of further undermining faith in the flagging greenback and perhaps prompt Asian nations also to consider unhooking their currencies from the dollar.
The Arab states may revalue by an unspecified amount in as soon as a month, a well-placed source - who declined to be identified because the matter was confidential - said on Saturday. No decision had been made on whether to revalue, he said.
The comments came as heads of state of the Organisation of the Petroleum Exporting Countries began a summit meeting in the Saudi capital, Riyadh.
Gulf states are facing record inflation, caused partly by the weakening dollar which has made imports from Europe more expensive. Consumer prices rose a record 4.9 per cent in Saudi Arabia in August while inflation in the UAE increased to a record 9.3 per cent last year. Qatar has the highest inflation in the region, reaching 14.8 per cent.
"It makes sense for them to do it," said Jens Nordvig, senior global markets economist at Goldman Sachs in New York. "Given the emerging inflation pressures, there are very good reasons for them to allow currency appreciation." Arab states talk of revaluation (more) By Matthew Brown and Anchalee Worrachate
Mark Alexander
