The United Arab Emirates and Qatar may switch benchmark currencies within six months and Saudi Arabia may switch within two years, the report said Friday.

Pegging the dirham to the dollar should allow for gradual appreciation or depreciation of the currencies. But, the dollar's decline in recent years has spurred the impulse for nations to switch to a more stable currency such as the euro.

International Monetary Fund Middle East and Central Asia Department Director Mohsin Khan cautioned against de-pegging the dirham, saying a 20 percent revaluation would hit the Middle East with regional asset shrinkage of up to $400 billion.

"Dollar denominated oil revenues will also suffer a similar setback," Khan said.