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The two-day summit of Gulf leaders starting in Doha on Monday will be keenly watched for any indication as to what action the six Gulf countries may take with regard to their currency pegs to the declining US dollar.
Markets are rife with speculation that the GCC will go for currency revaluation sooner rather than later, but there have been no coherent comments from the region's central bankers on the issue.
It is also not clear whether the GCC will act in unison or if member states will opt for different measures. However, one thing is clear: inaction is not an option as inflation has become a serious issue across the region. The GCC should not bear the cost of the falling value of the US dollar. Central banks will have limited monetary policy choices as long as the fixed dollar pegs remain. The Doha summit should suggest some collective course of action.
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