UAE currency move lifts veil on Gulf rifts

The decision of the United Arab Emirates (UAE) to pull out of a Gulf Arab currency union last week is a sign of weakening Saudi power in the Arabian peninsula, where it has traditionally seen itself as the regional leader, analysts say.

"The UAE's decision is a blow to GCC (Gulf Co-operation Council) unity more generally and could be interpreted as a sign of how the balance of power between Saudi Arabia and the smaller, richer GCC states has shifted over time," said Tristan Cooper of Moody's Middle East.

The UAE bombshell came two weeks after Gulf leaders agreed at a summit in Riyadh that Saudi Arabia, the region's largest economy and the world's top oil exporter, would be home to the GCC joint monetary council and thus of the central bank that would manage the new currency.