Depeg

Depeg

To remove a previously instituted peg on a currency. For example, if Currency A is pegged to Currency B at a 1:1 ratio, but the central bank for Currency A decides to let it float, it is said to be depegged from Currency B. Depegging may occur if the peg is causing inflation or if the central bank is unable to sustain the peg for other reasons.
References in periodicals archive ?
New York : Saudi billionaire Prince Alwaleed bin Talal raised the possibility that the Kingdom may need to depeg its currency in the future as the country undergoes unprecedented social, political and financial change.
Additionally, some Gulf banks, particularly in Qatar have to bring back substantial negative $positions to below 25 per cent of shareholders' equity, protecting the banks from a potential depeg.
Zadjali has also said that Oman is unlikely to depeg its currency from the US dollar as long as oil is priced in dollars.
Bini Smaghi was out saying that China should start to depeg from the USD, while Oman said that as long as oil was priced in USDs, the country would keeps its peg.
As we've seen, the recession of the US dollar has reflected negatively on GCC currencies linked to it; therefore I believe that GCC countries should depeg their currencies from the dollar to curb inflation, as we did in Kuwait.
Additionally, some Gulf banks, particularly in Qatar, have to bring back substantial negative dollar positions to below 25 per cent of shareholders' equity, protecting the banks from a potential depeg.
Separately, Marios Maratheftis, head of research for the Western Hemisphere at Standard Chartered, told the paper that Gulf Cooperation Council states are not in a strong position to depeg from the dollar currently as such a step needs the right timing.
According to Dauba-Pantanacce, the reason Gulf countries have not announced any immediate plans to depeg from the US dollar is because revenues are measured in the currency, which contends a lot of the possible problems arising from potential dollar movements.
The council has already faced significant hurdles in its plan to form the union: Oman's controversial decision to opt out of the union in 2006, and Kuwait's move to depeg its currency from the US Dollar in 2007, have caused delays in the introduction of a monetary union.
It implemented timely anti-inflationary measures by being the first Arab state to depeg its currency from the dollar.
Moreover, Al Suwaidi said they will not depeg the dirham from the dollar.