Official: Kingdom will continue to peg its currency to the falling dollar
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RIYADH, Saudi Arabia: Saudi Arabia has no intention of depegging its currency from the weakening U.S. dollar, Finance Minister Ibrahim al-Assaf said Saturday following a meeting with U.S. Treasury Secretary Henry Paulson.
Al-Assaf said the government takes into account the kingdom's interests when making such decisions, according to the official Saudi Press Agency.
"We have said more than once that we have no intention to depeg the riyal from the dollar," SPA quoted al-Assaf as telling reporters at a news conference in the western seaport city of Jiddah.
Kuwait was the first country in the six-member Gulf Cooperation Council, which includes Saudi Arabia, to shun its peg with the dollar by allowing the dinar to float against a basket of currencies.
The dollar's decline has pushed up the cost of imports into the Gulf, fueling inflation. The decline has also watered down the benefit of record oil prices.
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Al-Assaf said he updated Paulson on the economic situation in the kingdom, the world's largest oil exporter, as well as about Saudi Arabia's oil policies, said SPA.
Asked whether he discussed soaring oil prices during the meeting, Paulson said that current oil prices are a "burden" on economies around the world, the agency reported.
On Wednesday, David McCormick, Treasury's undersecretary for international affairs, said in a briefing to preview Paulson's Mideast trip that Paulson would be urging "all countries to open up their oil markets to investment that boosts yields, exploration and production."
But he said that Paulson will not make any specific request for nations to boost their production during the current period of soaring oil prices.
On a trip to the Middle East earlier this month, U.S. President George W. Bush failed to win the help he sought from Saudi Arabia to relieve skyrocketing U.S. gas prices. Saudi officials said they already were meeting the needs of their customers worldwide and there was no need to pump more.
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