The value of GCC currencies Research Paper Example | Topics and Well Written Essays - 3250 words

The value of GCC currencies - Research Paper Example Conclusion: 14 8. Bibliography: 15 1. Introduction: The Gulf Cooperation Council (GCC) is also known as the Cooperation Council for the Arab States of the Gulf (CCASG). It is a political and economic union of the Arab states neighboring the Persian Gulf and the Arabian Peninsula. The six member states of the GCC are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates. They are often known as â€Å"The GCC States.† Some of the general objectives of GCC countries are a follows: promotion of scientific and technical progress in different industries like mining, agriculture, water and animal resources; setting up joint ventures among the member states; cheering cooperation of the private sectors; strengthening ties between the peoples of the member countries; and establishing and developing a common currency for all the member countries. The common currency of GCC is known as Khaleeji (meaning Gulf in Arabic). At present, the GCC monetary union is the third moneta ry union in the world in terms of GDP, after the Euro and 2) the unofficial monetary union between the United States and the Latin American countries which declared the US dollar as their currency. There are certain problems now facing the GCC council. According to IMF report (1997), the key challenge facing the GCC countries was the financial condition and valuation of the currency in the member countries of GCC. ... The exception in GCC is Kuwait, where the currency is valued to a group of currencies that is heavily weighted in favor of the US dollar. Therefore, the exchange of the Kuwaiti Dinar to the US dollar remains relatively stable. In last five year the rate of Kuwaiti Dinar is always within 0.27-0.29 to US dollar (QNB, 2012, p.31). During 2008, GCC countries were facing the inflation as it was reached up to 11. 2%. According to the financial analyst, revolution of the economy in the upward direction was helpful in order to control the inflation rate which helped to bring down the import cost. According to the report the GCC monetary union project was mainly inspired by the Euro. The problem which was face by different countries that have Euro as their currency is a helpful tool for the monetary policy makers in GCC countries to figure out the loopholes and act accordingly. This evaluation is helpful to figure out whether introducing a common currency for all the member countries of GCC i s efficient or not (QNB, 2012, p.31). 1.2. Economic Structure: It is very clear from different research that the growth of GCC as one of the strongest economy of the world is mainly on the basis of highs price of gas and oil (energy sector), and also with the help of rapid economic growth. During 2007-2011, the world GDP growth rate was 2.8% where as, GDP growth in GCC was a staggering 4.7% making it the fastest growing group of country in the world (QNB, 2012, p.4). According to the report of QNB (2012), the GCC economy has seen a golden period during 2003- 08, when GDP grew at the rate of 19.9%. This was a result of continuously increasing demand for energy sources as an outcome of robust global development, particularly in Developing Asia (QNB,