Kuwait became in May the first Gulf Arab state to abandon its peg, citing the rising cost of imports.
Revaluation is “unlikely to be imminent” because of a desire among nations to co-ordinate their actions, Barbara Nestor, an emerging-markets currency strategist at Commerzbank, wrote in research note.
“Qatar and the UAE will urge the group to concede to currency reform, possibly during the year.
“They will seek a strategic solution and increase exchange-rate flexibility by shifting to a Kuwait-style diversified basket, sequencing the shift within the group and taking it to the monetary union.”
Inflation accelerated to records across the region last year, fuelled by the dollar’s weakness and the rising cost of food and rents.
Average inflation in the GCC countries quickened to between 7% and 10% by the end of 2007, from an annual 1.4% in the 10 years through 2005, according to Commerzbank.
“For the time being they are likely to use administrative measures, such as price and rent controls, wage increases and increased liquidity absorption, to deal with the inflation problem, temporarily,” wrote London-based Nestor.
Some Gulf states have announced caps on essential commodities, including rice and wheat, in recent months to ease inflation.
