Kuwait changes dollar peg

The Gulf Times announced today that Kuwait has changed its peg against the dollar. The currency is now linked to a basket of currencies.

Despite all the fuss being made (destroying chances of monetary union e.t.c.), the appreciation today consisted of a mere 0.37%.

Never-the-less, it sets a precedent that could be followed in Qatar. That would be good news for expats, many of whom have seen the value of their salary in non-dollar currencies steadily eroded by the decline of the dollar.

It could also lead to a decline in inflation, as prices of imports in non-dollar terms decreases.

Currently Qatar remains committed to a currency union. Whether this is such a good idea remains to be seen. Not only would Qatar lose control over interest rates (and therefore a major weapon against inflation, a real problem in Qatar), the likelihood is that the currency union's economy would be dominated by Saudi Arabia's huge economy.


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Qatar Doha Middle East currency