Why Gulf Dollar Pegs Survive Through Wars, Oil Shocks
Published on: Wednesday 13 April 2022
Gulf Arab nations have pegged their currencies to the dollar for decades. There’s a reason for that: they reduce foreign-exchange risk for states in the region because so much of their revenue comes from oil, which is priced internationally in the U.S. currency. Periodically the mechanisms are tested, as they were in 2020 when a price war sent crude plummeting below $20 a barrel. With oil back around $100 in 2022, they appear to be in good shape, despite questions about the dollar’s role in the