Bahrain to adopt basket of currencies


The finance ministry declined to comment on the report which contained the latest in a stream of contradictory remarks from policymakers that have kept markets guessing. Other papers carried some of the remarks, including Al Ayyam, which usually follows the official line. Both newspapers said there was no change in currency policy.

The rulers of Bahrain, Saudi Arabia and other Gulf oil producers preparing for monetary union as early as 2010 decided against dropping their pegs to the dollar at a summit this month.

Bahrain would move from the dollar peg to a basket without letting the dinar appreciate, Finance Minister Shaikh Ahmed bin Mohammad Al Khalifa said, according to Al Wasat.

"In regards to delinking the peg and the trading of currencies, Bahrain will move towards a basket of currencies, and in the end nothing will change," the paper quoted him as saying at a council session on Monday.

Finance Ministry Media Adviser Ahmed Osman Taher declined to comment on the newspaper reports.

Al Ayyam newspaper also carried the some of the remarks yesterday without a full quotation.

"The minister of finance … confirmed that Bahrain will not change its currency policy to shut the door in the face of currency speculation, indicating that delinking the dinar from the U.S. dollar will not change the exchange rate that has remained stable since 1980," Al-Ayyam reported.

Although some central banks are cutting interest rates to deter market bets of an appreciation of their currencies, remarks from other officials are keeping speculation alive.

Gulf rulers agreed to keep any currency reform talks secret, to avoid stirring speculation, Qatar’s prime minister said after a summit this month.

Then Bahrain’s foreign minister said on Saturday Gulf finance ministers and central bank governors would meet within days to discuss revaluations.

United Arab Emirates Central Bank Governor Sultan Nasser Al Suweidi said last week his country had no plans to alter exchange rate policy, re-aligning his position with that of Saudi officials including Finance Minister Ibrahim Al Assaf.

Suweidi had nourished market expectations of an imminent change in policy when he said last month he was under growing social and economic pressure to drop the peg and track a currency basket as Kuwait did in May.



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