Nur al-Cubicle

A blog on the current crises in the Middle East and news accounts unpublished by the US press. Daily timeline of events in Iraq as collected from stories and dispatches in the French and Italian media: Le Monde (Paris), Il Corriere della Sera (Milan), La Repubblica (Rome), L'Orient-Le Jour (Beirut) and occasionally from El Mundo (Madrid).

Friday, September 21, 2007

Saudis Show Signs of DecouplingTheir Currency from the Dollar

An Op-Ed published today in Rome's La Repubblica by Marcello de Cecco, Professor of Monetary Economics at the Università di Roma "La Sapienza", "Passing the Baton", contained some surprising news that has been completely ignored by the US press.

Prof. de Cecco's editorial primarily focuses on the historic benchmark set my the euro on Thursday when it broke through the psychological barrier of $1.40. There are several reasons for the soaring euro, including actions taken by Saudi Arabia. It it is concerning Saudi Arabia that Prof. de Cecco made three rather shocking revelations.

The first item is that there is rampant inflation in the states along the Arabian Gulf, not due to the rising cost of oil, but to the skyrocketing food prices. The second is that Saudi Arabia, which has traditionally pegged the rial to the dollar, did not follow Ben Bernanke's move and left its interest rate unchanged. For Prof. de Cecco, the Saudi decision is indicative of its desire to decouple from the dollar and peg the rial to the euro. The last item is that Saudi Arabia and Russian have struck a deal to jointly manage OPEC policies.

The article is well worth the read, and I hope to get around to translating it later.


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