Qatar is considering dropping its dollar peg as previously noted last week. The prime minister is hoping that Gulf Arab nations will act together before making any such decision which is highly unlikely. The QAR shot up after the statement since investors bought the currency in speculation that the revaluation will result in an appreciation of the currency.
… Speaking at a security conference in Qatar’s capital, Doha, Sheikh Hamad bin Jassim bin Jabr al-Thani said a decision on de-pegging from the dollar was not easy and was under study, Gulf Times reported, paraphrasing Sheikh Hamad. ”I hope the GCC states take a unified position in this matter,” the paper quoted him as saying.
Other gulf currencies will take this news and try to revalue before Qatar acts. Currently speculators are spreading their investments around the Gulf in AED, BHD, QAR, & SAR awaiting an anticipated revaluation in these currencies. A surprise revaluation similar to that of Kuwait & a currency basket in the quickest time possible would be the best way to manuever the economies of the Gulf and minimize the negative effects of speculators.
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