Forbes urges Gulf to re-evaluate peg

Forbes urges Gulf to re-evaluate peg
Posted in 7days online
http://www.7days.ae/en/2007/11/19/forbes-urges-gulf-to-re-evaluate-peg.html

Calls for Gulf countries to revalue their currencies gained momentum yesterday as American entrepreneur Steve Forbes recommended a one-time adjustment. Speaking at the Leaders in Dubai Business Forum, the editor-in-chief of Forbes magazine advised continuing the peg to the dollar, but to re-evaluate rather than devalue currencies.

“The thing that should not be done now is to allow your currency to float,” he said. “Eventually, and rather than going for a basket of currencies, Gulf countries should do a one-time revaluation and keep it fixed, whether it is 8 per cent, 10 per cent or 12 per cent and then re-peg to the dollar.” Forbes hit out at the US Federal Reserve for inviting the ongoing credit crisis, and called upon Gulf states to act now to correct the Fed’s mistakes and protect themselves from any further depreciation of the dollar.
“Currencies should be stable in value – that’s the first rule. Look at what the Federal Reserve has done in the US. By printing too many dollars and allowing the property sector to build four years worth of houses in two years, it has created a credit crisis.

“Even though the pound, yen and euro have appreciated, they all have inflation. They have all sinned, but the Federal Reserve is the biggest sinner of all,” he said. By re-evaluating, Forbes claimed, Gulf governments would buy themselves time to make a decision over going for a basket of currencies in future.
He also criticised the International Monetary Fund for wrongly encouraging countries to keep their currency values low.