The GCC (Gulf Cooperation Council) economies need not de-peg their currencies from the dollar although the greenback is falling, causing most Gulf currencies to weaken, according to Doha Bank Group CEO R Seetharaman
(pictured).“I don’t think the GCC economies should consider de-pegging from the dollar,” as other major currencies such as euro, pound and yen were neither stable nor indicating stable growth, Seetharaman said.Finding that some of such (non-dollar) economies also have stakes in the US treasuries, he said the Arab economies are expected to hold about $470bn in US bonds. Moreover, the revenue from hydrocarbon sales for the GCC economies is also in dollars.With the fall in the dollar against other currencies, Seetharaman said most GCC currencies have become weaker against other currencies such as pound, euro or yen.As the Gulf countries import various products from Europe and other countries, he said the GCC economies’ inflation pertaining to imported items (particularly food) may go up.Seetharaman referred to the consumer price index (CPI) in June, according to which inflation pertaining to the food and beverages group, which has a weight of 13.20% in the CPI basket, rose 5.9% year-on-year.Qatar’s living costs, based on the CPI, had risen 1.8% year-on-year in June mainly on costlier food, garments, transport and medical care, according to Qatar Statistics Authority figures.The Qatar Central Bank (QCB) had recently cut its overnight deposit rate by 25 basis points to 0.75% as well as overnight lending and repo rates by 50 basis points each to 4.5%.“Further action from the QCB will again depend on the inflation trends prevailing in Qatar,” Seetharaman said.