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Will the Gulf’s dollar pegs survive the fall in oil prices?

The collapse in oil prices over the past week has put pressure on the Gulf’s dollar pegs, but we think that a wave of devaluations is extremely unlikely. Large foreign exchange savings provide substantial buffers and the likes of Bahrain and Oman, which are most vulnerable to a period of low oil prices, can probably rely on financial support from their neighbours to avert devaluations.

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