Recently Kuwait abandoned it's currency link to the dollar in attempt to quell inflation there. Many countries, including many in the Middle East, have home currencies linked directly to the dollar- the world's reserve currency. We've all heard much bluster about China's similar dollar peg.
This is an event that is clearly bearish for the dollar. If other Middle Eastern nations follow suit, for instance Saudi Arabia or Qatar where inflation was 11.83% in 2006, the dollar will be in more trouble. Central banks around the world have satiated their appetite for dollars.
Bloomberg article. Enjoy.
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