Monday, May 15, 2006

Dollar slide fuelling UAE inflation :: Reuters - "The US currency’s slide against the euro was a key factor in Kuwait’s decision to revalue its dollar-pegged dinar by 1 percent last week and markets have been speculating that other Gulf Arab central banks would soon follow suit. . . . The Saudi and Qatari central banks have sought to quash market speculation that they would follow Kuwait’s move. The UAE central bank has declined comment, but most analysts think a dirham revaluation is unlikely in the short-term."

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Blogger grapeshisha said...

All the same signs of the crash of 87. I think some revaluation will be necessary if this downward tumble continues.

12:20 PM  
Blogger John B. Chilton said...

I'm not that sort of economist who thinks much about these things. At the end of the day what was the trigger for the Crash of 87 and what were its consequences?

See: The Crash of '87

When was the last time the AED/$ rate was allowed to change?

1:15 PM  
Blogger grapeshisha said...

Fair point, but COL as it is, and for Kuwait to make a move, is surely cause for some concern. Even though Kuwait only officially pegged a couple of years ago, it was essentially mirroring that rate since it basket pegged.

I suspect that revaluation wont happen, but I think that it should, and it should only happen once, prior to currency union

3:48 PM  
Blogger secretdubai said...

Meanwhile the average expat sits here getting poorer and poorer, finding they can't even afford a Starbucks when they visit their home cities. Unless their home cities are in the US, in which case they probably don't even notice.

I have near-erotic fantasies about waking up to find Sheikh Mo/Khalifa has just repegged the dirham 1:1 to the Euro... or even the sterling...

4:37 PM  

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