GCC Central Banks Mirror US with 0.25 Percent Interest Rate Increase

On Wednesday, central banks in the Middle East (Saudi Arabia, UAE, Qatar, Bahrain) replicated the Fed's interest rate increase of 25 basis points to protect their currencies' peg against the US dollar says Ziad Daoud from Bloomberg.

Protecting currency pegs refers to actions taken by central banks or monetary authorities to maintain the stability and integrity of a fixed exchange rate system between their national currency and another currency, and in this case the US dollar. Currency pegs are established to ensure that the local currency maintains a constant exchange rate with the anchor currency within a pre-defined exchange rate band.

Common strategies used to protect currency pegs include: