REFILE-WRAPUP 1-UAE policymakers say dollar peg to stay

By Stanley Carvalho

ABU DHABI (Reuters) - The United Arab Emirates has no plans to drop or revalue its currency peg to the dollar, and any decisions on currency policy will be taken collectively by Gulf states, the UAE central bank governor said on Monday.

"There will be no revaluation, no dropping the dollar peg," Sultan Nasser al-Suweidi told reporters in Abu Dhabi.

One of the UAE's top businessmen with close links to Dubai's rulers also said he did not expect a government committee that is studying currency policy <AED=> <AEDF=>,to recommend any change to the peg.

"Nobody expects them to come out and say let's change," Sultan Ahmed Bin Sulayem, chairman of the sprawling state-owned Dubai World conglomerate, told reporters. Sulayem is seen as one of the key economic lieutenants of Dubai ruler and UAE Prime Minister Sheikh Mohammed bin Rashid al-Maktoum.

Sheikh Mohammed said last week that the UAE had set up a committee to report to him after considering whether the peg should be retained.

Many analysts expect the UAE and its Gulf neighbours to eventually cave in to economic pressures and drop or revalue their currency pegs to the dollar.

Despite strong inflationary pressures, Gulf states with dollar pegs have to cut interest rates in line with the U.S. Federal Reserve, which has been sharply easing monetary policy.

Kuwait dropped its dollar peg last year, switching to a basket of currencies, dealing a major blow to plans by Gulf Arab states to achieve monetary union by 2010.