The Gulf States, Bahrain, Kuwait, Oman, Qatar, United Arab Emirates and Saudi Arabia have, with the exception of Kuwait, long kept their exchange rates pegged to the dollar. The first chart shows the exchange rates of Qatar and Saudi Arabia as typical of the majority of the Gulf States and that of Kuwait that has been slowly appreciating since early 2002.

As inflation has increased with the rise in oil wealth in all the states, talk of appreciation of the currencies of the other five gulf states has become widespread. The second chart shows monthly inflation rates in Kuwait, Oman and Saudi Arabia. These are the only states that have monthly data. The remaining states have only quarterly or annual data. The annual rates of inflation for these states are shown in the third chart. The latest data for Bahrain is 2.59% in 2005, for Qatar 9.29% in 2006 and 13.76% for the United Arab Emirates in 2007.