(MENAFN - Khaleej Times) The Bahrain Competitiveness Council, or BCC, has urged the need to revalue the Bahrain Dinar, as the monetary policy remained unchanged for the last 30 years.
"As the Bahraini currency is pegged to the dollar, the overall macro economy in Bahrain lacks an independent monetary system," Jawad Habib, Chairman of the BCC, said while launching the council's Competitiveness Report for 2007-08 recently. He said revaluation was expected to reduce inflation and stabilise prices.
"Although the degree of inflation in Bahrain varies between sectors and for different goods and services, it is considerably lower than that of its neighbours such as Qatar and the UAE. Inflation in the kingdom is partially imported in nature due to the Bahraini Dinar's peg to the US Dollar which has been deteriorating in value for the past couple of years. Inflation is also internally generated, caused by speculation in land prices, increased demand for goods due to the increasing population."
He said interest rates in Bahrain are quite high and do not reflect international market rates. Interest rates on deposits are well below international rates while interest rates on loans are medium to high compared to market rates elsewhere. It appears that all banks in Bahrain follow the same practice and charge high interest rates.