Bahrain Asks Gulf Allies for Financial Aids to Avoid Currency Devaluation

2017-11-02 - 8:28 p

Bahrain Mirror: Bloomberg website specified in economic affairs revealed that Bahrain has asked Gulf allies for financial assistance as financial crisis in the country aggravates.

The website said that Bahrain seeks to replenish its foreign-exchange reserves and avert a currency devaluation that could reverberate across the region,

Saudi Arabia and the United Arab Emirates were approached, two of the people said. A third person said Kuwait was also asked.

"Most people are fully expecting the other Gulf countries to come to Bahrain's aid," said Jason Tuvey, a London-based economist at Capital Economics. "If Bahrain was forced to devalue its currency it would probably start to raise questions about other currency pegs."

The website said that these countries responded by requesting the island kingdom do more to bring its finances under control in return for the money, indicating that talks are at an early stage.

The report pointed out that Bahrain has been more vulnerable to slumping oil prices and regional political instability than other GCC countries.

The central bank's foreign reserves, including gold, have tumbled about 75 percent since 2014 to just above 522 million dinars ($1.39 billion) in August, the website further stated.

It highlighted that without aid or a recovery in oil revenue, authorities may struggle to keep the currency's peg to the U.S. dollar.

The report stated that the decrease in foreign-exchange carries the risk of a currency depreciation, commenting "the central bank, being a significant lender to the government, may not be able to maintain the peg.

Arabic Version



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