Currency Conundrums in the Gulf
This report outlines pros and cons of the Gulf countries' currencies pegged to the US dollar at fixed rates. It explains that this practice paid great dividends in helping the individual countries establish sound macroeconomic fundamentals and low rates of domestic inflation. At the same time the author states that the system comes at the cost of precluding the use of a monetary policy and hence suggests a more flexible system.
© 2008 Middle East Institute (MEI)