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US default risk a concern for Gulf says banker

Dubai, June 9, 2011

Gulf central banks' reserves should be more diversified in the long run, and any US debt default would put downward pressure on the dollar and fuel inflation, a Gulf central banker said on Thursday.   

'(The default risk) is a concern for countries that have investment denominated in the US dollar. It will lose value,' Khalid Alkhater told Reuters.   

'Secondly, ... this will put more downward pressure on the US dollar exchange rate against other major currencies so there will be more inflationary pressure,' he said.

Asked whether this was going to affect the reserve policy of Gulf central banks, he said: 'Regardless of this issue, my opinion always was that countries should diversify. They should diversify their portfolio more and more in the long run.' - Reuters




Tags: Central Bank | Gulf | dollar peg | GCC | debt default |

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