Sultan bin Nasser Al Suwaidi, governor of the UAE Central Bank, agrees. Hence, pegging the dirham to the US dollar facilitates trade in goods and services. There has been no practical disadvantage. The Asian crisis, precipitated by the Thai Government's decision in 1997 to devalue the baht following a wave of speculation, strengthened resolve. But financial considerations are not the only factors at work.
Most analysts agree that pride is also a factor, especially in Saudi Arabia.
Arguments such as these go a long way towards justifying the central bankers' approach. But most analysts agree that the pegging policy is not without its downsides. Primarily, it means that Gulf governments are forced to follow United States monetary policy uncomfortably closely. To stimulate your economy, you would want to lower interest rates. You couldn't do it.