Ending dollar peg won't solve Gulf inflation-Paulson

ABU DHABI, June 1 (Reuters) - U.S. Treasury Secretary Henry Paulson said on Sunday leaders of Gulf oil producers have told him that abandoning their currency pegs to the dollar will not solve their vexing inflation problems.

Paulson, speaking to reporters on his plane from Doha to Abu Dhabi as part of a four-day trip to the Gulf, said leaders in the region have "quite an awareness that the peg does not influence inflation to a significant degree".

"They recognize that inflation is the overriding issue. Ending the peg is not the solution to the inflation problem."

Paulson reiterated, however that currency policy decisions were sovereign matters and said he could not rule out any moves by Gulf states to abandon the peg. (Reporting by David Lawder; editing by Firouz Sedarat)