The prime minister of the United Arab Emirates has ruled out any immediate move to stop pegging his country's currency to the US dollar in a bid to strengthen it, as Gulf partner Kuwait has done.

 

Sheikh Mohammad bin Rashed Al-Maktoum's remarks on Tuesday came after speculation that the UAE and Qatar could follow in Kuwait's footsteps.

He said: "No, we haven't thought [of delinking the UAE dirham from the dollar]. We're still sticking to the dollar for the time being, and we haven't really discussed this with my government."

 

Qatar is still working towards monetary union with five other Gulf countries, although meeting the 2010 deadline was not crucial, Qatar's Central Bank governor has said.

 

"We at the Qatar Central Bank (QCB) will not change the exchange rate and we will stick to the dollar peg. There is no change to our policy at all," Sheikh Abdullah said in an interview published on Tuesday in Gulf Times.

 

Asked whether Kuwait’s move to switch the exchange rate mechanism to a basket of currencies would place pressure the Qatar riyal, the governor said: "I don't think it will at all. Our economy is very strong and we are very steady. We will stick to the currency peg."

 

Kuwait's currency policy shift would not derail plans to work towards a monetary union, he said.

 

 

Abdullah said: "We will continue to stick to the Gulf monetary union and co-ordinate with the others."

 

Kuwait peg In a surprising decision on Sunday, Kuwait pegged its dinar to a basket of currencies, more than four years after linking it to the dollar in preparation for a single Gulf currency.

 

Gulf economists said the Kuwaiti move reinforces expectations that the six-nation Gulf Co-operation Council (GCC) will not be able to meet a 2010 target to launch a single currency.

 

The GCC groups Bahrain, Oman and Saudi Arabia alongside Kuwait, the UAE and Qatar.