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How credible are the region’s dollar pegs?

Many of the non-oil producing countries in the region have tended to support their dollar pegs by maintaining a level of FX reserves sufficient to cover the monetary base. In Egypt and Jordan, reserves are more than enough to cover the monetary base. But, in Lebanon, growth of the monetary base has outpaced that of FX reserves since 2011. The result is that the country’s dollar peg looks extremely vulnerable in the event of a bout of capital flight.
James Swanston Middle East and North Africa Economist
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