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Saudi Cenbank says Abandoning Dollar a “Non-Starter” | ASHARQ AL-AWSAT English Archive 2005 -2017
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FRANKFURT, (Reuters) – Pegging a planned new Gulf currency to a basket of currencies is one option on the table although there is no perfect solution, Saudi Arabia’s top monetary official, Muhammad al-Jasser, said on Thursday.

On Tuesday, Kuwait — which dropped its dollar peg in 2007 in favour of a currency basket which includes the greenback — said that Gulf Arab countries will discuss pegging their planned single currency to a basket instead of the U.S. dollar.

Asked for his view on the topic al-Jasser, Governor of the Saudi Arabian Monetary Agency, told reporters on the sidelines of a Euro Finance Week event: “That is one of the possibilities, (but) there are a lot of possibilities, including keeping the peg or otherwise.”

“Nothing is ruled out, nothing is ruled in. There is no perfect solution.”

The Saudi central bank kept interest rates unchanged in the third quarter, viewing a further rate cut as unlikely to spur lending while a rate hike was unnecessary given tepid inflation.

The peg issue is gaining momentum again as the dollar retreats and oil prices recover, helping economies in the world’s top oil exporting region emerge from a downturn.

“What we have now is serving us very well and I see no reason to change it now,” al-Jasser said of the Saudi riyal’s peg to the dollar “If conditions change, we will review it,” al-Jasser said.