From Simon Derrick of the Bank of New York.

Reuters reports that central bank governors of the UAE will meet in March to discuss currency pegs. The agency cites Governor Sultan Nasser al-Suweidi who said: “We might come up with a decision that says we are OK and stick to the same (regime), or we could come to the conclusion that we need to change”. He added: “Changing the peg is a GCC [Gulf Cooperation Council] decision. We went into it together. We will go out of it together … whether it should be fixed or fluctuating is one issue. Another is issue to change the currency of the peg.”

Interesting.   Very interesting.   Full Reuters story is here.

The cost of the GCC’s peg to the dollar rose sharply in 2006 – the dollar slumped, driving up the price of a lot of GCC imports precisely at the time some GCC countries really ramped up their investment spending (and no doubt other spending too).  The result: very high inflation rates in some countries, notably Qatar and Dubai/ UAE.