Bahrain is committed to keeping its currency pegged to the dollar, its central bank said on Tuesday, after the dinar fell in the spot market to a 17-year low because of concern about the country’s rising public debt.
The brief statement added: “The CBB confirms maintaining the existing monetary policy, centred on a peg to the US dollar.
“The peg remains an important policy and provides an anchor for monetary policy which contributes to the stability of financial transactions and a positive impact on the overall economic and investment activities.”
The dinar dropped as low as 0.38261 to the dollar and was trading at 0.38150 at around 1100 GMT, unchanged from before the central bank’s statement.
Bankers in the region said they did not detect any concerted attack on the currency, but a plunge in Bahrain’s international bond prices in recent weeks had fueled jitters in foreign exchange trading and hedge funds were selling the dinar in the forwards market.