Paulson: Gulf states aware inflation isn't about dollar

06/2/2008 | Reuters

Persian Gulf leaders understand that dropping the link between their currencies and the dollar will not keep inflation out of their economies, U.S. Treasury Secretary Henry Paulson said. Five of the six Gulf oil-producing countries peg their currencies to the dollar. That means the Federal Reserve's interest rate cuts taken to spur the slumping U.S. economy are matched in Gulf countries already booming, thanks to record-high oil prices. Some in the Gulf want to shift to pegging to a basket of currencies rather than the dollar only.

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