Gulf States May Dump the Dollar

Sinking greenback fuels inflation in booming Gulf economies
By Jim O'Neill,  Newser User
Posted Nov 20, 2007 2:31 PM CST
Treasury Secretary Henry Paulson, left, meets with United Arab Emirates Central Bank Governor Nasser al-Suweidi, Friday, April 13,2007 at the Treasury Department in Washington. (AP Photo/Pablo Martinez...   (Associated Press)
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(Newser) – The flagging greenback is forcing oil-rich Gulf states to consider uncoupling their currencies from the US dollar to fight runaway inflation at home and the devaluation of their own currencies, the Wall Street Journal reports. Leaders are considering everything from an outright break to revaluing their own currencies to pegging them to several currencies, including the dollar.

While the Saudis say they’ll continue to peg the riyal to the dollar, they may revalue it to offset downward dollar pressure. Kuwait in May chose to use a basket of currencies as its yardstick. Its dinar has strengthened 5% against the dollar. Change is almost certain; experts say it could come as early as next month.