Gulf states are considering a plan to set up a regional investment bank as part of a move to establish a common market for the six nations, state-run Kuwait News Agency (KUNA) reported on Wednesday, citing the secretary general of the Gulf Cooperation Council (GCC). The plan was discussed during a Tuesday meeting in Jeddah between Gulf finance ministers in a move to revitalize efforts to establish a tighter economic bloc, KUNA quotes Abdulaziz Al-Attiyah as saying. Attiyah also said that a GCC interconnection grid - which links Kuwait, Bahrain, Qatar and Saudi Arabia - will be officially launched in December before the region's rulers meet in Kuwait, KUNA said. The GCC is a loose-knit organization of six sheikhdoms and kingdoms in the region. It includes Saudi Arabia, the UAE, Qatar, Kuwait, Bahrain and Oman. Separately, Kuwait has no plan at the moment to re-link its dinar to the US dollar after two years of pegging to a basket of currencies, the finance minister said in comments published on Wednesday. “At this stage, we don't see a need to change the dinar's exchange rate policy based on pegging to a balanced basket of currencies,” Mustafa Al-Shamali said in a reply to a parliamentary question published in Al-Rai daily. The minister said the policy provides flexibility to the central bank in designing and executing its monetary policy. In May 2007, Kuwait ended almost five years of the dinar's link to the dollar and reverted to a basket of currencies in a bid to fight inflation that soared to record high levels before starting to decline late last year. The change to the dollar peg in 2003 was taken to facilitate the launch of the Gulf monetary union and single currency, which many observers now believe will be too difficult to launch on time in 2010. Officials at the central bank were unavailable for comment on the report. The currency was tracking a “special weighted basket of currencies from countries that are linked to Kuwait through significant financial and commercial relations,” the bank said in the statement. The central bank severed the dinar's peg to the dollar on May 20, 2007 and started tracking a basket of currencies. It has declined to give the composition of the basket, saying only that the dollar is its biggest component. Meanwhile, Kuwait stocks slid further as profit booking intensified in Zain. The index dropped 25.6 points, extending its losses to the second straight session even as investors remained wary of the market direction. The bourse winded up 0.3 percent lower at 7795.4 points amid a steep fall in volume turnover. Weighted index fell 5.71 points to 458.74 points after posting impressive rise right through previous week.
