UAE and Qatar 'could dump (U.S. dollar) peg in six months'

[TexasLawyer]

Source: Bloomberg/ Gulf News (UAE)

UAE and Qatar 'could dump peg in six months'
Bloomberg
Published: December 18, 2007, 22:59

Dubai: The UAE and Qatar may opt to change their fixed exchange rates to the US currency in the next six months, according to Citigroup.

The members of the Gulf Cooperation Council may abandon a link to the dollar and move to a basket of currencies, or adjust the value of the pegs higher by 5 per cent to 10 per cent, Citigroup's emerging-markets strategy team wrote in a report. Saudi Arabia is less likely to consider a change, according to the world's third-largest trader of foreign exchange.

"The first option appears to make the most sense to us, but it is not clear that this will be the preferred route," the New York-based bank's 2008 trading strategy report said. "Any change in currency regime could either happen unilaterally or multilaterally."

The Gulf nations, which supply at least a fifth of the world's oil, are under pressure to rethink their foreign-exchange policies as the dollar tumbled 8.2 per cent against the euro this year.




Read more: http://www.gulfnews.com/business/Economy/10175827.html

[cliss]

1. How will this affect the dollar?

Does anyone have a best guess estimate?
I know that Iran just last week decided to quit using Petrodollars altogether. They've just abandoned the dollar.

I know that the UAE and Qatar are having huge problems because they are pegged to the dollar. They're experiencing enormous inflation and big problems so it's in their interest (and probably survival) to get away from the dollar.

I've also read that AS OF THIS MOMENT, Saudi Arabia and China are single-handedly saving the US from going under completely. Completely.

They are funneling huge amounts of cash to rescue the financial system because they can't have it go under. It's not that they want to - they have to.

So Cheney can breathe a sign of relief. He gets to wage his wars for a while longer. Just a bit.

[HuffleClaw]

2. while bushco. manipulates the world bank into saying china is 'overvalued'

which was just laughable.

[nealmhughes]

3. Can anyone blame them? Anyone not bound to the dollar would be switching

to the Euro ASAP.

Reminds me of when I used to spend 6 months out of the year in Scotland in three month cycles. About 1983 or 4 the pound got down to $1.04. I bought at $1.08 and sat on it. Six months or a year later, my 1000 pounds were worth a fortune (to a poor sailor) again.

I remember going to Pringle and buying cashmere sweaters for my mother, sister and grandmother, and two aunts and not even blinking. I had made about $400 on that single transaction and sitting on it.