Comments on: Euros rise & Arabs spending http://chartsandnumbers.com/2008/04/23/euros-rise-arabs-spending/ a simple analysis of up-to-date business news from Bahrain, Kuwait, Oman, Saudi Arabia, UAE & Qatar Sat, 19 Jul 2008 14:26:34 +0000 http://wordpress.org/?v=MU By: Ivo Cerckel http://chartsandnumbers.com/2008/04/23/euros-rise-arabs-spending/#comment-282 Ivo Cerckel Fri, 25 Apr 2008 08:38:28 +0000 http://mylastresort.wordpress.com/?p=183#comment-282 “As for short-term expectations many Arab Gulf companies which import products from Europe are severely hurt by the sharp rise in the Euro.” That’s what happens when one of Arab Gulf currencies de-pegs from the US dollar and re-pegs to a currency basket in which that same US dollar comprises the largest weighting. Even though it tracks a basket, Kuwait has barely kept up with the dollar's tumble on global markets because the U.S. currency comprises the largest weighting in its basket. The dinar has risen about 9 percent against the dollar since Kuwait severed its peg on May 20, while the greenback has plunged more than 16 percent against the euro and almost 13 percent against a basket of major currencies. (Kuwait Jan inflation soars to 9.5 pct on rents, food Reuters - Friday, April 25 http://malaysia.news.yahoo.com/rtrs/20080424/tbs-kuwait-inflation-955c2a1.html ) Wouldn’t it be more advisable to re-peg the Kuwaiti Dinar to gold? No, the IMF prohibits this. Let’s repeal the IMF which since August 15, 1971, when US President Nixon broke the Bretton Woods Agreement, has no more reason for existence anyway. “As for short-term expectations many Arab Gulf companies which import products from Europe are severely hurt by the sharp rise in the Euro.”

That’s what happens when one of Arab Gulf currencies de-pegs from the US dollar
and re-pegs to a currency basket
in which that same US dollar comprises the largest weighting.

Even though it tracks a basket, Kuwait has barely kept up with the dollar’s tumble on global markets because the U.S. currency comprises the largest weighting in its basket.
The dinar has risen about 9 percent against the dollar since Kuwait severed its peg on May 20, while the greenback has plunged more than 16 percent against the euro and almost 13 percent against a basket of major currencies.
(Kuwait Jan inflation soars to 9.5 pct on rents, food
Reuters - Friday, April 25
http://malaysia.news.yahoo.com/rtrs/20080424/tbs-kuwait-inflation-955c2a1.html )

Wouldn’t it be more advisable to re-peg the Kuwaiti Dinar to gold?

No, the IMF prohibits this.

Let’s repeal the IMF
which since August 15, 1971,
when US President Nixon broke the Bretton Woods Agreement,
has no more reason for existence anyway.

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