When I first began analysing Gulf banks more than 20 years ago, I wrote on a piece of paper the exchange rates of the six Gulf currencies against the dollar and stuck it in front of my desk. With the exception of the Kuwaiti dinar, I could use those same rates to convert the currencies today.
Even the Kuwaiti dinar, which for most of the last 20 years has been managed against a basket of currencies, has remained within about 8 per cent of an average rate since the mid-1980s. (The dinar was pegged to the dollar for three and a half years from 2003 to 2007.)
So I am always rather bemused when the Gulf states speak of their plans for a single currency. Five out of six of them already have a single currency – it is called the dollar.
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