Arab States Talk of Revaluation
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

Kuwait Parliament Committee Calls for Revaluation of the Kuwaiti Dinar
KUWAIT TIMES: KUWAIT: A Kuwait parliament committee urged the government to allow the dinar currency to reflect the real value of the US dollar, which is at record lows against the euro, state news agency KUNA reported yesterday. "On the foreign exchange market the government is (asked) to review the exchange rate of the US dollar in the light of the actual prices on the market...," KUNA quoted budget committee recommendations as saying.

Kuwait abandoned its peg to the dollar in May, allowing the currency of the world's seventh largest oil exporter to appreciate 0.37 percent. The central bank said at the time it wanted to contain the impact of the dollar's slide on imports, which were driving up inflation. Analysts including those at Deutsche Bank and Standard Chartered expect Kuwait to move again this year especially if the dollar's slide continues.

The dollar slipped for a second session yesterday, hitting a fresh low against the euro, a 26-year low against sterling and a one-month trough against the yen. The parliamentary committee made the comments as part of a package of recommendations which parliament adopted as it approved the 2007/08 state budget. Standard Chartered said in June Kuwait was likely to let its dinar rise a further 0.35 percent against the dollar in 2007. Dinar revaluation urged (more)

Mark Alexander