GCC countries should revalue currencies

GCC countries should revalue currencies
By Saifur Rahman, Business News Editor GULF NEWS
Published: November 18, 2007, 15:27

Dubai: The six oil-rich Gulf countries should carry out a one-time big revaluation to adjust their currencies, Steve Forbes, US entrepreneur, told Leaders in Dubai conference.

Gulf consumers have lost between 25 to 35 per cent in purchasing power during the last two years as the falling value of dollars coupled with the strong economic growth has added inflationary pressures on the economy that has reflected in higher cost of living.

Forbes, however, is a strong advocate of the currency peg.
"The Gulf countries should carry out a one-time big revaluation by 10 to 15 per cent of their currencies to the dollar," he said. "Don't let your currency float, keep the peg, but revalue it and revisit the peg from time to time," he said.

According to the International Monetary Fund, inflation in the UAE has reached 9.3 per cent last year on higher economic growth and partly due to the weakening value of the dirham pegged to the US dollar.

He blamed the US Federal Reserve for inflating the global economy.

"The US Federal Reserve has been printing too many dollars, causing global inflation," he said.

"The major currencies, the euro, pound and others are in a way adding to the global inflation, with the Federal Reserve being the biggest sinner. The UAE and other Gulf countries should revalue their currencies to adjust."

In an exclusing interview with the Gulf News, Forbes said, the Gulf states should tell the US Federal Reserve chairman to "put its act together".

Dubaisation
Forbes said Dubai has created a model for economic growth, and others should follow what he fondly referred to as 'Dubaisation'.

"Saudi Arabia is undergoing a reform process and developing its midedle class, which will create a healthy balance for growth. However they should look at Dubai and other economies should follow the Dubaisation example," he said.

Forbes, a strong critic of the International Monetary Fund, said that the institution is good for nothing.

"The IMF loves to pay money to the countries and enjoy when they suffer. The IMF should be sent to Bolivia or some other places," he said.