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Doha: Qatar will continue with the riyal's peg to the US dollar and believes a Gulf Arab currency union is possible by 2010, Qatari Central Bank Governor Shaikh Abdullah Bin Saud Al Thani said.
"The currency peg is still holding and this will continue," Shaikh Abdullah told reporters on the sidelines of a conference on Friday.
In preparation for monetary union, the six Gulf Arab states have pegged their currencies to the dollar, which fell 10 per cent against the euro last year, driving up imported inflation across the region.
Speculation about a region-wide revaluation reached fever pitch last month after the UAE's central bank said Gulf states could decide at meeting in Riyadh now scheduled for April whether to keep or change their exchange rate regime.
Asked about plans to create the monetary union by 2010, Shaikh Abdullah said: "It (2010 deadline) is possible, we are going to discuss it in April and we will agree to have the procedures to have one currency."
Deadline
Asked about inflationary pressures, he said: "We have already taken initiatives on that, and inflation is going to go down slowly.
Governors of Gulf Arab central banks are scheduled to meet at the April meeting to discuss the monetary union.
But Oman opted last year not to join by the planned 2010 date, and policymakers from other states have said the deadline will be tough to meet.
"The way to do it will be organised and discussed at that time. Everything depends on our meeting in April," Abdullah said.
Qatar is expected to have the second highest inflation rate in the Gulf after the UAE, with prices rising 6.4 per cent this year compared with 10.1 per cent in 2006, according to a Reuters poll in December.
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