Gulf currency pegs offer silver lining in era of weaker dollar

DUBAI: More than a decade ago, Gulf Arab nations struggled to preserve their currency pegs as the US dollar went into retreat. This time, the link to a sliding greenback may give reassurance.

Back in 2007 and 2008, the weak dollar sent the cost of imports spiralling and allowed inflation to take hold. Now, the sluggish domestic demand has put a lid on price growth, while the dollar declines could give a boost to non-oil industries like tourism once the pandemic eases. Also out of the picture are the inflationary hot-money flows to the region when Brent crude was near US$150 12 years ago.