From The Wall Street Journal:
“For many years, oil-rich Persian Gulf states have pegged their currencies to the dollar. Now that link is stoking a bad bout of inflation in their red-hot economies and putting policy makers in a dilemma: Break the dollar peg and risk undermining the U.S. currency, or keep it and face growing local discontent.
The dollar peg has ‘served the economy...very well in the past,’ said Sultan Nasser al-Suweidi, the governor of the United Arab Emirates' central bank, last week. ‘However, we have reached a crossroads.’”
From Gulf Daily News:
“UAE policymakers kept up pressure for a review of Gulf dollar pegs yesterday and currencies rallied across the oil-exporting region on a signal that Saudi Arabia may be willing to discuss reform.
The Saudi riyal hit a 21-year high and investors bet on an appreciation of 2.4 per cent in a year after a source familiar with Saudi policy said the kingdom could consider its first revaluation since 1986.”
From the International Herald Tribune:
“Merrill Lynch predicts that either the United Arab Emirates or Qatar will cut their dollar peg within six months. Standard Chartered says the six Gulf Cooperation Council nations need to raise the value of their currencies 20 percent. And currency traders are betting that Saudi Arabia will sever its 21-year link to the dollar, according to data compiled by Bloomberg.
‘The dollar peg is doomed,’ said Jim Rogers, chairman of Rogers Holdings in New York and a former partner of the hedge fund manager George Soros.”