When the six leaders of the Gulf Co-operation Council member states open their normally unspectacular annual summit in Qatar on Monday, the attention of many in the financial world will be guaranteed.
The ostensible purpose of the meeting in Doha is to discuss plans for monetary union by 2010. But after weeks of heated debate, markets will be studying the minutiae of the GCC leaders’ words for any hint of whether key members of the organisation, including Saudi Arabia and the United Arab Emirates, will retain long-standing pegs to the weak US dollar or look to revalue their currencies.
“This is perhaps the most anticipated meeting this year in the region,” says Mushtaq Khan, economist at Citibank. “So many statements have been made over the past couple of weeks which have really increased the tempo and the market’s expectation that something is likely to happen.”
Bankers from London to Bahrain have already been betting on revaluations, pushing the UAE dirham to a 17-year high and the Saudi riyal to its strongest level since its peg was introduced in 1986, heaping unprecedented pressure on the monetary authorities. The oil-rich GCC region includes Kuwait, Bahrain, Qatar and Oman, key US allies that control more than $1,000bn (€683bn, £486bn) in reserves.
read more:Dollar peg puts Qatar summit in spotlight
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