Gulf currency pegs to remain despite oil price slump, S&P says | ZAWYA MENA Edition

Gulf currency pegs to remain despite oil price slump, S&P says | ZAWYA MENA Edition:

The six nations of the Gulf Cooperation Council will maintain their pegged currencies despite a fall in oil prices, S&P Global Ratings said on Monday.

The ability of Gulf countries to defend their currencies' pegs, to the dollar in most cases, has come under scrutiny as historically low oil prices and the fallout from the coronavirus pandemic have pressured their economies.

Kuwait, Qatar, the United Arab Emirates and Saudi Arabia have strong levels of reserves to weather shocks, while Bahrain and Oman have a lower level of external liquid assets, S&P said.

But the ratings agency believes Bahrain and Oman's wealthier neighbours would provide financial support in times of stress if needed, similar to a $10 billion aid package pledged to Bahrain by Kuwait, Saudi Arabia and the UAE in 2018.