UAE. The Gulf countries' currency peg to the dollar is a 'terrible mistake' and will cause problems for the region as the US currency is expected to decline, Jim Rogers said.
The six Gulf Cooperation Council states should form a joint currency as soon as possible, the chairman of Singapore-based Rogers Holdings said at a conference in Dubai Monday.
The new currency shouldn’t be linked to any other as the region has enough foreign reserves and oil to back it up.
“You’ve got good foreign exchange reserves and a lot of oil” to back a common currency, Rogers said during a banking conference in Dubai.
Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman agreed in 2001 to form a European Union-style monetary union by 2010 to boost regional trade. Oman later pulled out.
Kuwait is the only Gulf Arab state to have dropped its currency peg to the dollar, giving it some control over monetary policy.
Gulf Arab leaders in December approved an agreement to create a central bank and single currency for the region to boost trade and strengthen monetary policy.
A single currency would allow the Gulf states to stop pegging their currencies to the dollar and implement independent monetary policy.
Rogers said the dollar will suffer because the US government’s bailout plans and the economic stimulus will increase the US debt, weakening the US currency.
“I plan to sell all my US dollars,” he said. “The Federal Reserve will continue to print money, and this will destroy any credibility associated with the US dollar.”
In a previous interview Rogers said the dollar is "going to lose its status as the world's reserve currency. It will be devalued and it will go down a lot. These guys in Washington, they want to debase the currency."
"They think that if you drive down the value of your money, it makes you more competitive, now that has never worked in history in the long term," said Rogers
Rogers has spent a career being one step ahead of mainstream investment thinking. Amongst his many accomplishments, Rogers was co-founder with George Soros of Quantum Fund. During his ten years with the fund, the portfolio gained more than 4,000%, while the S&P rose less than 50%