UAE hopes to rejoin planned Gulf single currency project

06 December 2010

Single currency unlikely to be launched by its current 2015 deadline

The UAE hopes to rejoin the planned Gulf single currency project “one day”, the UAE economy minister was quoted as saying by a Saudi newspaper on 5 December.  

“The Emirates still hopes that there will be a single currency for the countries of the [Gulf Cooperation] Council one day,” Sultan bin Saeed al-Mansouri told Saudi newspaper Al-Eqtisadiah.

The second-largest Arab economy withdrew from the project in May 2009 in protest over the decision to base the Gulf central bank in Riyadh. UAE policymakers had said rejoining was not on the table unless it is profitable.

The choice of Saudi Arabia as the host country for the joint central bank was interpreted by analysts as a sign that the Gulf region’s largest economy was trying to regain the influence it had lost to the UAE.

In March 2010, Saudi Arabian Monetary Agency (Sama) governor, Muhammed al-Jasser, was elected the first chairman of the Gulf Monetary Council. The first task of the new body is to establish a GCC central bank, then prepare the launch of the single currency, first due to be introduced in 2010. When it became apparent the currency would miss its initial 2010 deadline, the current 2015 deadline was set.

In May 2010, the GCC secretary-general Abdulrahman al-Attiyah said the single currency was also unlikely to be launched by 2015.

The project has made slow progress in light of the ongoing financial crisis.

“We in the Emirates believe our destiny is in the common Gulf region, whether economically, politically or socially,” said Al-Mansouri, before adding that Gulf policymakers would discuss the union during a regional summit to be held in Abu Dhabi on 6-7 December.  

Oman pulled out in 2006 and has since ruled out any comeback.

All the Gulf states currently peg their currencies to the dollar, with the exception of Kuwait, which abandoned its dollar peg in 2007.

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