Currency roadmap almost finalised

The governor of the UAE central bank says an agreement for monetary union is very close to the final draft.

Sultan bin Nasser Al Suwaidi and Mohammed bin Ali bin Zayed (Deputy Governor of the Central Bank), at a meeting on anti money laundering.

GCC bankers came close to finalising a monetary union agreement at their meeting earlier this week, said Sultan Nasser al Suwaidi, the UAE Central Bank governor. The agreement provided a roadmap toward adopting a common currency for the region, although central bankers have said there were disagreements over whether the joint currency could be circulated by the 2010 target date. Central bankers agreed at a meeting in Doha earlier in the week to form a monetary council - effectively the core of an eventual common central bank - to carry the plan forward.

"More or less, it's the final draft, except for some typing errors and edits," Mr Suwaidi said. The GCC's intention to move to a single currency by 2010 was thrown into question recently by rising inflation rates across the region, which would most likely have to be tamed before a currency union could be feasible. GCC central bank governors and finance ministers will meet in Jedda in September to discuss the Doha agreement. Mr Suwaidi said that it would be "more clear" after the Jedda meeting as to whether the GCC nations would meet the 2010 deadline.

All GCC countries, except for Kuwait, link the value of their currency to the dollar, which has been depreciating steadily for more than a year. That depreciation has been blamed as one of the causes of inflation. However, GCC bankers have steadfastly resisted breaking the link with the dollar or revaluing their currencies. Mr Suwaidi also reiterated that GCC nations would not re-value their currencies, adding that a steady exchange rate was the best policy as members worked towards adoption of a single currency. "[The dollar peg] is better for our economies and for our union," he said. [e-mail]