Open figure viewer
Subject
Gulf currency pegs.
Significance
The collapse in oil prices has led to some speculation that fiscal pressure may lead some Gulf Cooperation Council (GCC) countries to abandon their longstanding currency pegs to the dollar. Some oil exporters in other regions have abandoned their own pegs over the last year. One signal of market concern is the discounts now being applied to Gulf currency forwards, indicating a risk of devaluation, albeit relatively low.
Impacts
Foreign investors in the Gulf can remain confident of exchange rates.
The transition to the long-planned Gulf monetary union will be delayed further until the 2020s.
Real-effective exchange rates will remain overvalued, indicating poor international competitiveness.
Keywords:
Gulf states,
ME/NAF,
Bahrain,
Kuwait,
Oman,
Qatar,
Saudi Arabia,
United Arab Emirates,
economy,
exchange rate,
fiscal,
foreign investment,
monetary,
policy,
prices
© Oxford Analytica 2020. All rights reserved. This content contains general information about geopolitical, macroeconomic and social developments or (where stated) other matters. It does not contain advice or recommendations that may be relied on. Where links to external websites are provided, this does not indicate that Oxford Analytica or Emerald agree with, endorse or have checked for accuracy the contents of said sites.
2016
You do not currently have access to this content.
