Aseismic shift may soon be under way in foreign ex-change policy in the Middle East. Immediate attention is on the Gulf countries, led by Saudi Arabia, with a peg to the dollar. Policymakers arenow debating whether they should alter their longstanding currency policies. It is not only the dollar's vulnerability that has prompted this; it is also the region's need to address cyclical and structural changes.

This week's Doha summit of the Gulf countries' heads of state failed to resolve the issue. They stayed committed to a single currency by 2010, but did not formally address the present currency problem. Saudi Arabia, perhaps under pressure from the US, is resisting any change to the dollar peg.