is there a advantage for currencies to pegged with weak dollar?

This is the news that I get from internet that said:-

Abundant liquidity, triggered by sharply higher oil revenues, and the effect of currencies pegged to a weakening dollar are fuelling inflation in the Gulf region, economists say. And the situation is so serious that Gulf business leaders will meet in Bahrain on Monday to get advice from the International Monetary Fund (IMF) and the European Union on how to tackle the problem. "The growth of money supply in Gulf countries has in some cases exceeded 20 percent," leading Bahraini economist Ahmed al-Yusha told AFP this week. "This reflects in (higher) demand, and consequently affects prices." Gulf Cooperation Council members Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates have been enjoying a windfall of oil revenues on the back of record crude prices. But the surge in revenues, which have injected GCC economies with a shot of energy reflected in impressive economic growth, has also left countries awash in cash.

The IMF expects overall GCC inflation to rise to six percent in 2008, with consumer prices in some member states rising at much higher rates. The UAE and Qatar registered 9.3 percent and 11.8 percent, respectively, in 2006. Most final inflation figures for 2007 have not been released, but inflation is estimated to have hit 11 percent in the UAE and 12 percent in Qatar. Saudi Arabia, which traditionally had a fairly low inflation rate, reported a 4.1 percent rise in its consumer price index in 2007. A key element in higher prices is the sharply higher cost of housing. Even though the region is experiencing a frenzy of construction, there is still a bottleneck in supply. The increase in the cost of goods that are imported from non-dollar zones is also blamed. A December study by the Federation of GCC Chambers blamed inflation mainly on the huge money supply and the peg of all GCC currencies - except the Kuwaiti dinar - to the deteriorating dollar. "Available liquidity that is accompanied by a fixed supply of goods and services ... and the drop in the value of local currencies due to the weakening of the dollar" are the two main reasons for inflation, said the Saudi-based federation, which groups the region's chambers of commerce, industry and agriculture. The study pointed out that the weakening greenback contributes to the "increase in the cost of GCC imports from countries whose currencies had appreciated against the dollar, like the EU, Japan and China." "The imports of the GCC jumped from 154.5 billion dollars in 2003 to 376 billion dollars in 2007, a 143 percent increase," the study said. The dollar peg forces GCC central banks to follow the US Federal Reserve in setting interest rates. But while the US central bank continues cutting rates to stimulate a sluggish economy, GCC central banks are faced with expanding economies that were already overheating at the higher rates. On Tuesday, the Federal Reserve slashed key interest rates three-quarters of a point, lowering the federal funds rate to 2.25 percent, and most GCC central banks followed suit with cuts of their own. Dubai-based investment bank EFG-Hermes said on the same day that the need for a "currency reform" in the GCC increases with the aggressive interest cuts in the United States and the sharp dollar weakness.

"We forecast a greater than 60 percent probability of currency reform" in the first half of 2008 by one or more states, the bank said, without elaborating whether reform should mean currency de-pegging or revaluation. It suggested however that the UAE or Qatar might lead the way, while saying it might be done by the GCC as a whole. Meanwhile, Yusha suggested that the link to the dollar should be revisited without necessarily de-pegging the Gulf currencies, saying this could be done through revaluation.

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So do you think is a good ideal to invest in weak dollar? Better think twice first before you put your money in weak dollar. Do more research the fundamental of dollar and you will know why.

As for me what I think Dollar got a hard time to climb back to pre-credit crunch level. This is due to high level of bad debt in US, unless US come out a new standard for their currency policy that are not Dollar policy.