Country Report Saudi Arabia May 2011

Outlook for 2011-15: Exchange rates

Saudi Arabia, Bahrain, Kuwait and Qatar remain committed to plans for a Gulf monetary union, despite the withdrawal from the project of the UAE and Oman. A joint monetary council has been set up, with the governor of SAMA, Mohammed al-Jasser, as its chairman, and this is likely to evolve into a central bank by the end of 2012. However, the countries still need to agree on various technical issues and meet the convergence criteria, and so the setting up of a single GCC currency is unlikely until later in the forecast period. The riyal's peg to the US dollar may be adjusted in 2014-15 to prepare for its introduction. Initially, a single currency would probably be pegged to the dollar, although a currency basket might be introduced later.

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