DUBAI/MANAMA:
The United Arab Emirates warned markets against betting on a dirham revaluation as investors piled pressure on the region's dollar pegs, expecting Gulf rulers to change currency policy at a summit next week.

The UAE was able to withstand pressure from speculators who drove the dirham to a 17-year high on Friday, al-Khaleej newspaper quoted Central Bank Governor Sultan Nasser al-Suweidi as saying, echoing a warning from Bahrain's central bank.

Suweidi ratcheted up expectations Gulf oil producers would sever links to the tumbling dollar, when he called last month for the region to track a currency basket to check inflation.

The speaker of Bahrain's parliament joined a chorus of calls for currency reform, proposing the government track the dinar against a currency basket as fellow Gulf oil producer Kuwait has been doing since May, al-Ayam newspaper reported. In remarks carried by Dubai-based Khaleej, Suweidi moved to quell investor expectations that a change was imminent.

"Their speculation will not yield the gains they expect," Suweidi said in remarks initially aired on state-owned Dubai TV, according to the newspaper.

Bahrain's central bank threatened to take action against anyone betting on dinar appreciation and accused foreign banks of spreading revaluation rumours, Middle East Economic Digest reported after an interview with Governor Rasheed al-Maraj. Kuwait's central bank also warned investors against speculating on a revaluation in March.

In May it dropped the peg to the dollar saying the US currency's slide was fuelling inflation by making some imports more expensive. Suweidi said the UAE central bank was not "currently" considering dropping the peg and any decision would be made by the government with other Gulf oil producers preparing for monetary union as early as 2010,