DUBAI (AlArabiya.net)
The United Arab Emirates withdrew Wednesday from a planned Gulf Arab Monetary Union, according to the state news agency, throwing the project into doubt even as four other Gulf countries reiterated their intention to participate.
“The UAE has decided not to take part in the proposed monetary union agreement between the states of the Gulf Cooperation Council,” the state news agency WAM quoted an unnamed Foreign Ministry official as saying, adding that the GCC had been notified.
The UAE and four of its neighbors, including Saudi Arabia, had planned to converge their economies with a view to eventually launching a common currency.
Saudi Arabia, Kuwait, Qatar and Bahrain said they were still committed to the monetary union plan, a source told Reuters after the UAE announced its decision.
" The UAE has decided not to take part in the proposed monetary union agreement between the states of the Gulf Cooperation Counci " WAM news agency The UAE, the world’s third-largest oil exporter, is the second country to withdraw after Oman dropped out in late 2006.
In 2004 the UAE officially offered to host the eventual Central Bank of the monetary union, but two weeks ago the GCC decided to house it in Saudi Arabia.
The Governor of the UAE Central Bank, Sultan Nasser al-Suwaidi, said that the country would maintain its expansionary monetary policy and keep its exchange rate pegged to the U.S. dollar.
Kuwait, which complicated monetary union plans by dropping its peg to the dollar in 2007, said it remained on board. |
" I think this is more a statement of protest over the decision that was taken on choosing Saudi Arabia " Mohammed Yasin, Shuaa Securities The UAE did not explain why it decided to withdraw and the central bank could not be reached for comment.
"I think this is more a statement of protest over the decision that was taken on choosing Saudi Arabia," Mohammed Yasin, chief executive at the UAE's Shuaa Securities, told Reuters.
"It is more over the way it was chosen, not where it was chosen... I don't think it will have any affect on the economy or the stock markets."
The GCC states have until Dec. 12 to ratify the monetary union deal, which must be done before a Gulf monetary council, the first leg of the central bank, can begin operations. |
