JEDDAH, (Reuters) – U.S. Treasury Secretary Henry Paulson said on Saturday the dollar peg for currencies in the Middle East had served those countries well and any changes to the peg would be a sovereign matter.
Asked about the dollar peg, Paulson, on a visit to Saudi Arabia, Qatar and the United Arab Emirates, told a news conference: “That is a sovereign decision … The dollar peg, I think, has served this country (Saudi Arabia) and this region well.”
Paulson earlier met Saudi Finance Minister Ibrahim al-Assaf to discuss a range of issues including the oil market, the U.S. and Saudi economies and issues related to foreign exchange.
Assaf said the Saudi government did not intend to delink its currency from the dollar or revalue it: “We have no intention of depegging or revaluation.”
Turning to the price of oil, which hit a record high of more than $135 a barrel last week, Paulson reiterated his calls for additional investment in oil producing countries, particularly from foreign sources, to help increase production. “There is no doubt that the current prices are a burden on economies around the world and a burden on people around the world,” Paulson said.
Assaf agreed, saying Saudi Arabia was investing billions of dollars to increase both upstream crude oil production and downstream refining capacity to help meet global demand. “We don’t like these extreme volatilities in the (oil) market. They are not good for the consuming countries and they are not good for the producing countries.”