Oil Currency - Forex Trading

With oil prices seemingly reaching new highs daily, a lot of Forex market participants have been trying to use this fact as a proxy for currency trading. General consensus is that some national currencies are correlated, to some degree, to major commodities and can be taken advantage of. Most experts, however, have never been able to agree on which currency would be the best crude play. Until now.
Number of oil rich countries are small states located around the Persian Gulf. Outside of crude production, their economies are not large, in line with small populations. This countries formed a Gulf Cooperation Council, both economic and, to a lesser degree, military organization. Saudi Arabia is the largest member state, with Kuwait, Qatar, Bahrain, United Arab Emirates and Oman making the list. Yemen is a pending member.
Since oil is priced in US dollars, respective currencies of the member states have been pegged to dollar. Over last few years this arrangement created certain problems for the Council states: very high crude prices and weak dollar caused huge inflation pressures. In spite of that, central banks had to lower rates in line with FED, due to dollar pegs, furthering inflationary threats. For example, Qatar's inflation exceeded 13% in 2007. Not a welcome development.
After years of discussions and planning, central banks of Gulf Cooperation Council, have approved a draft of a charter for a central monetary authority. This agreement moved the group closer toward a goal of establishing a single currency for the member states. The launch of the new currency is set for 2010, but most experts expect it to be delayed. In project of this complexity and scope working out all the issues almost always takes longer than expected. We all remember Euro.
For example, Kuwait severed its dollar link last year and started tracking its dinar against a basket of currencies to help ease inflation that was driven in part by higher import costs - a decision that could be a major obstacle to reaching the 2010 target date for monetary union. Kuwait has not disclosed composition of the currency basket used for the new peg. Every member would also have to cap inflation within certain range, before the the union can proceed.
Despite set backs like this, at a recent meeting in Qatar, central bank governors reaffirmed the aim of monetary union in 2010 as Gulf states sought to avert additional unilateral decisions on currency policy that could jeopardize the project. Gulf Cooperation Council countries would "push ahead with the implementation of single currency on time", stated one official.
Once the new currency is introduced, it would likely become available for trading very quickly. Most brokers would like to capitalize on the initial interest as soon as possible. Cost of trading would be another story, however, with rich spread and some illiquid time periods throughout the trading day. Nonetheless, it is certain there are scores of traders eagerly awaiting this yet unnamed currency.
Gulf Cooperation Council members believe that new monetary union will help curb inflation. Among many other stated benefits are increased economic cooperation in the region, easy in money and goods flow. Single currency should also place Persian Gulf States in better position in increasingly border less world economy.