The escape from the US dollar had begin. Kuwait became the first of the oil sheikdoms to break its dollar peg in May, a move that has begun to rein in rampant money supply growth. A fall in the dollar to $US1.50 against the euro is not out of the question at all by the first quarter of 2008. According to Ambrose Evans-Pritchard, writing in The Sydney Morning Herald, (22/9/2007, p.44), said Saudi Arabia had refused – for the first time – to cut interest rates in lockstep with the US Federal Reserve, signalling that the Gulf kingdom was preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East”.
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