Dr Jasim Husain, former head of economics at the University of Bahrain and one of the new intake of MPs elected to parliament last year, said he disagreed with a much-publicised Deutsche Bank report which this week predicted the dinar would be revalued by 10 to 15 per cent following the much anticipated meeting in Saudi Arabia.
The bank’s ‘GCC macro outlook’ also predicted a similar revaluation by the UAE and tipped Saudi Arabia and Oman to revalue their currencies by as much as 25 to 30 per cent. However, while not ruling out such moves on the part of her GCC neighbours, Dr Husain said he expected Bahrain to hold steady.
He said: “I do not think this will happen – this is wishful thinking, Bahrain would not do that. This country tends to avoid such actions and my understanding after talks with CBB officials is that will continue to be the case. Bahrain tends to take a very conservative approach.”
Asked for his thoughts on what any revaluation of the dinar would mean for the Kingdom, Dr Husain responded: “It could escalate the sort of instability we have been trying hard to avoid.”
He added: “With the pressing issue of inflation in the Kingdom the last thing we need is another variable that would cause more problems.”
According to recent reports the International Monetary Fund (IMF) has said that currency revaluation is on its agenda for the GCC.
Dr Husain said: “There is pressure on the GCC countries to make a move from the US and Europe. European products will be cheaper after revaluation – that’s what the EU like to say. But we would have difficulty exporting items not priced in the US dollar.”
Asked if there would be significant economic consequences for Bahrain if one or more of its GCC neighbours chose to revalue its currency, he said: “For sure. We will have to see to what extent they are going to revalue and how it would affect our trade relations.”
He added: “From my following of things the UAE is pretty much interested and they have been pushing for lots of changes as they are suffering from imported inflation. “My understanding is that Bahrain is the least interested.”
