Les exportateurs du pétrole de le Moyen-Orient devraient finir leurs devises' chevillent au dollar
DANS le président de l'Iran passé de semaine, Mahmoud Ahmadinejad, l'a damné pendant que « un morceau sans valeur de papier » et de ministre de la Chine, Wen Jiabao, a gémi qu'il cause son pays « grande pression ». Le dollar implacable diminuer-il a frappé un nouveau bas de $1.49 contre l'euro le 21 novembre - incite est en accord des critiques de l'Amérique, nerfs d'investisseurs cliquetants des' et de donner des maux de tête de décisionnaires.

Nulle part sont les dilemmes plus aigus que dans le Golfe, où pratiquement tous états riches en pétrole chevillent leurs devises au billet de banque. La combinaison des prix du pétrole montants et du dollar croulant tord leurs économies et remplit de combustible l'inflation. When the Gulf states meet on December 3rd in Qatar, they should agree to loosen their ties to the dollar.

The argument for linking to the greenback was to provide an anchor for the region’s economies, many of which are small, open and financially immature. In effect, the Gulf states import America’s monetary policy. The trouble is that a fixed currency makes it hard for oil exporters to adjust to swings in the price of oil. And monetary policy in the world’s largest oil-importer is not always right for those who sell the stuff.

Soaring oil prices have brought the Gulf Arabs huge riches. Their real exchange rates, as a result, ought to rise. The simplest way to do that is for the currency to strengthen, but the peg prevents nominal appreciation. Worse, the dollar itself has been falling. The result is rising domestic inflation. Some smaller Gulf economies now have inflation rates of around 10%.

What is to be done? The two most widely discussed options are to revalue or to shift to a currency basket (which Kuwait has already done). By repegging their currencies to the dollar at a higher rate, the Gulf states would alleviate some of today’s inflationary pressure. But they would not address the underlying mismatch between any oil exporter and a dollar peg. Switching the peg to a basket of currencies that included, say, the euro and yen as well would give the Gulf states a bit more protection against oil-price swings, but it is hardly a perfect fit. Since most big currencies belong to oil importers, the Gulf States would still be linking their currencies to monetary conditions that may not suit them.

Eventually, the currency pegs should be abandoned. After all, developed economies that are big commodity exporters, such as Norway, allow their currencies to float. In recent years many emerging economies have shifted from exchange-rate pegs to a “managed float”. Instead of aiming for an exchange rate, their central banks have an inflation target. If the Gulf states move to a single currency, as they plan to in the next few years, that currency should surely float. But floating is not feasible in the short-term. These countries have no history of independent monetary policy and few institutions to conduct it.

Look beyond a basket

For the moment, the Gulf states are stuck with a currency peg. But they could do better than the dollar. One intriguing idea is to include the oil price as part of a basket that includes the leading currencies (see article). This would ensure their currencies absorbed some of the impact of oil-price swings.

A big uncertainty is what such a shift would mean for the dollar. In the short term, the effect on the Gulf states’ appetite for greenbacks would not be dramatic, since the dollar would have a big weight in any basket. And there should not be a sudden sale of the oil exporters’ dollar reserves. The worry is that the end of the Gulf states’ dollar peg would send jittery investors into a panic. That risk is real. But with oil prices rising and the dollar falling, the dangers of inaction are greater. The Gulf states need to get rid of their dollar peg now.

http://www.economist.com/opinion/displaystory.cfm?story_id=10177927

Comment on 'Time to break free' :

RSS TrackBack URL

Related News: