In an egoistic move, UAE has pulled out of the proposed GCC monetary union and said it will keep its currency pegged to the dollar, three weeks after it was announced that the bloc’s central bank will be based in Riyadh, Arabian Business reports.
Sultan Nasser Al Suwaidi, governor of the UAE central bank, said that the country will maintain its expansionary monetary policy and that the dirham’s exchange rate will remain pegged to the US dollar.
Apparently, UAE’s decision to withdraw was due to Riyadh being named as the headquarters of the regional central bank.
Analysts predict bleak future for the monetary union and Khaliji, the proposed single GCC currency.
The union would have combined the nations to form the fifth largest economy in the world. However, Oman pulled out in 2006 and now UAE in 2009.