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Date: 18/12/2008


DIFC Economic Note for pegging GCC Common Currency to basket of currencies

The Dubai International Financial Centre (DIFC) published an Economic Note, which called for the GCC Common Currency that will be created by the GCC Monetary Union to be pegged to a basket of global currencies comprising of the US dollar, the Euro, the Japanese yen and the British pound.

Dr. Nasser Al Saidi, the Chief Economist of the Dubai International Financial Centre Authority said: "The historic GCC Monetary Union will need to be accompanied by a re-assessment of the exchange rate policy that links the currencies of GCC member states to the US dollar. Managing exchange rates against a basket of currencies rather than a single currency will allow adequate flexibility to tailor monetary policy that can address domestic conditions and withstand external shocks."

Titled ‘The Exchange Rate Regime of the GCC Monetary Union', the DIFC Economic Note suggested that while the peg of GCC currencies to the US dollar should be maintained for the time being, the new unified currency should be pegged to a basket of currencies at the launch of the Gulf Monetary Union on 1 January, 2010.