Inflation threatens to delay the common currency project pursued by Gulf Arab states and is leading to disagreements about the launch, a leading Gulf central banker was quoted as saying in a newspaper report.

As Gulf central bankers gather in Doha later in the day to review the common currency plan, inflation takes center stage as it threatens to throw the currency union plan off track and stall economic growth.

United Arab Emirates Central Bank Governor Sultan Nasser Al-Suweidi said differences in opinion were now emerging among the states -- Saudi Arabia, the UAE, Qatar, Bahrain and Kuwait -- who aim to set up a single currency as early as 2010.

'High inflation rates were never a concern before, and, although it is a temporary phenomenon, yet now it is indeed the factor behind the differences in opinion at this stage, and it can defer the issuance of the single currency beyond 2010,' Suweidi said, according to an article in newspaper Gulf News.

Oil's rapid acceleration toward $150 a barrel threatens to spur Gulf Arab inflation to new records as currency pegs to the ailing US dollar prevent the oil producers from mopping up excess liquidity.

Al-Suweidi said Gulf Cooperation Council (GCC) countries were 'currently working on rearranging priorities according to the new circumstances,' the newspaper said.

'The timeframe depends on the recent circumstances and developments where we find structural changes, in addition to the growing inflation,' he was quoted as saying.

Meanwhile, Al-Suweidi dismissed comments made by former Federal Reserve chairman Alan Greenspan calling on Gulf states to ditch their dollar pegs in order to tackle record inflation, according to an Arabian Buisness.com report.

It quoted Al-Suweidi as saying that he paid no attention to what Greenspan said about GCC monetary policy. "I don’t care about the statements of... Greenspan because he’s no longer in the government and he’s just interested in making interesting speeches," Al-Suweidi said.

Greenspan said in February during a trip to the region that inflation would fall "significantly" were Gulf states to drop their dollar pegs, sparking a rush of bets on a revaluation of their currencies. - Reuters and TradeArabia News Service