UAE pulls out of GCC single currency
- United Arab Emirates: Wednesday, May 20 - 2009 at 19:55
The UAE has announced that it will no longer be part of a region-wide monetary union, according to the official WAM news agency. 'The UAE has decided not to take part in the proposed monetary union agreement between the states of the Gulf Cooperation Council,' the agency reported, citing a foreign ministry source.
The UAE would have been the second largest economy in the agreement, after Saudi Arabia.
Abu Dhabi had been proposed as host city for the new regional Central Bank, but earlier this month members voted for it to be located in Riyadh.
With Oman and now the UAE both deciding against joining the monetary union, and Kuwait de-pegging its currency from the dollar in 2007, it now throws the future of the GCC common currency in doubt.
Giyas Gokkent, Chief Economist at National Bank of Abu Dhabi, said the decision was 'a major spanner in the works', while Standard Chartered bank said it was 'a serious setback to plans for a single currency'.
The UAE Dirham will remain pegged to the US dollar.
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