May 23rd, 2007
Follow Up on 6 Nations, 1 Currency
Follow Up post is a new feature from Dinar Chat to our listeners where we follow up on episodes and topics discussed earlier. Our first follow up is about the 6 Nations, 1 Currency episode [audio http://www.box.net/public/static/ildrpexu7s.mp3]
Kuwait Central bank finally agreed to discard the US $ for Currency Basket as the mean to weight the Kuwaiti Dinar. The 6 Nations, 1 Currency episode briefly discussed the benefits of such a move especially since the US economy has fluctuated over the past few years due to some political and internal factors.
Currency Basket is a selected group of currencies whose weighted average is used as a measure of the value or the amount of an obligation. A currency basket functions as a benchmark for regional currency movements - its composition and weighting depends on its purpose. A currency basket is commonly used in contracts as a way of avoiding (or minimizing) the risk of currency fluctuations. The European Currency Unit (which was replaced by the euro) and the Asian Currency Unit are examples of currency baskets.
Adopting the Currency Basket is the right start to have a more secure financial future and pave the way for converting Kuwait into a major business hub and possibly the financial capitol of the region. Dinar Chat and the Chat family would like to hear you take on such a move by commenting and discussing this matter.
May 23rd, 2007 at 8:44 pm
I remember the idea has been talked about when I was still there!! I personally think it’s too early to do it in 2010!! I think needs at least 10 -15 years more of studying! But well that’s my opinion!
Exactly uniting will make some stronger, but it’ll make many loose! Finland didn’t loose at first because Euro was stronger than the Finnish Markka and helped actually with the economy! But now in Cyprus I find it stupid! They’ll be taking Euro in 2008…. The CY Pound is as I think the strongest of all in Europe! 1CYP = 1.16566GBP, so as UK didn’t take the Euro because they would have lost, I think Cyprus shouldn’t have taken it either because of all the lose and financial problems they will face in the next 5 years because of the Euro!
Here in Europe as you said $ 100000000!!! Yes I agree with the exchange rate, you save!!! But is it really worth it? Will every one be involved with the benefit?? Yes the control of products prices is an advantage! I would also agree with the help each country will be standing by the other country as the example you gave; UAE getting in trouble, and the rest standing by them!!!
It’s real hard problem in European Union, when the eastern European countries started to join slowly! For example, 8 years ago, Finland got a big support from the EU to help in north of Finland’s (Lapland) economy, now that is almost taken away totally, because the Eastern EU countries need that support more! So there will always be a country that will be paying the outlay of the support of the other country!
For me and my opinion is that it’s not right for the politics to be that big factor! But I do know in the gulf that might be most impossible! I think the agreements should be put down years before even starting to think of the name of the currency!! It’s a very sensitive issue in the Gulf and should be solved!
I was wondering about the job availability between the gulf countries because I do know there is already a problem, so if joining the markets it will be even harder! Now I can go anywhere in EU and find a job! Again, in EU we work in every faculty while I know a Kuwaiti won’t work in cleaning roads or Kuwaiti lady won’t work as a housekeeper or a babysitter! So that also limits the jobs available around in the Gulf!
I have to say a great issue!! Beautifully discussed and very well podcasted!
I really think you guys rock!!!
May 23rd, 2007 at 11:00 pm
noracassandra: First of all thanks for the comment. Then I must say that your wealth of information and tactical analysis in the subject is impressive. Maybe you should consider join us in this tiny podcast so we all benefit from your knowledge. Your analysis to the GCC region is very true and that’s why we think that the adoption by the Kuwaiti Central Bank to the Currency Basket is the right start to achieve such a goal. The other thing that this move will do is help the Kuwaiti economy by avoiding the big fluctuations the US $ is going through over the past few years. Again amazing and very well discussed comment. Cheers