GCC to revalue its currencies
For a layman like me, what it means is those expatriates who are raking their monthly sum in GCC currencies will be sending more bucks back to their home countries. Not that I don’t care what this will actually do the country as far as inflation or other impacts on its micro economy are concern, but lets just take it as big currency means lot more money.
They are already in talks, I hope this will happen pretty soon. GCC countries except Kuwait have been maintaining fixed currency pegs to the dollar for the past three decades.
Quote from source
“The currencies of the UAE, Bahrain, Oman and Saudi Arabia face the imminent prospects of getting revalued by up to 30 per cent in the wake of meeting of the governors of the GCC Central Bank scheduled for next month. At their meeting in Saudi Arabia, the central bank governors are likely to review currency pegs to the US dollar and may agree to switch to another currency or a currency basket. According to Deutsche Bank AG, the UAE dirham and Bahrain dinar would be revalued by between 10 and 15 per cent while Saudi and Oman currencies could be revalued by 25 to 30 per cent.
The bank did not rule out the revaluation of Kuwaiti dinar and Qatari riyal, but pointed out that they are estimated to be around fair value. According to analysts, the immediate fallout of a dirham revaluation would be that Euro/Dollar-priced products will become cheaper, dampening consumer price inflation. There would also be a one-off currency gain for the owners of local real estate. But on the other hand, the region would become more expensive for some tourists and the inflow of foreign money might falter as assets would be more expensive.