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Thursday, 8 October 2009
Oil states deny secret talks on dollar
Big oil-producing nations have denied a British newspaper report that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the US dollar with a basket of currencies in trading oil.
Big oil-producing nations have denied a British newspaper report that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the US dollar with a basket of currencies in trading oil.
The dollar eased yesterday in response to the report, which was written by The Independent’s Middle East correspondent Robert Fisk and cited unidentified sources in Gulf Arab states and Chinese banking sources in Hong Kong.
It said the proposal was for trade in crude oil to move over nine years to a basket of currencies including the Japanese yen, the yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, which includes Saudi Arabia and Kuwait.
The report comes amid a debate on the dollar’s role as the world’s reserve currency, which has come under question. For most of this decade, the United States has struggled to maintain the dollar’s value.
But top officials of Saudia Arabia and Russia, speaking on the sidelines of International Monetary Fund meetings in Istanbul, denied there were such talks. The two countries are the world’s largest and second-largest oil exporters.
Asked about the newspaper report, Saudi Arabia’s central bank chief Muhammad al-Jasser said: “Absolutely incorrect.”
Kuwait’s oil minister made similar remarks, while Russia’s Deputy Finance Minister Dmitry Pankin said: “We did not discuss this at all.”
Algerian Finance Minister Karim Djoudi said: “Oil-producing countries need to stabilise revenues but ... I don’t see a need for oil trade to be denominated differently.”
The talks in Istanbul focus on correcting big trade imbalances that can destabilise the world economy. Many economists think the dollar may have to weaken further to reduce the imbalances. Analysts said while individual countries would find it relatively easy to stop using the dollar in settling oil trades, replacing the currency in which oil is priced required a massive effort.
“I don’t think this is a likely scenario in the short to medium term,” said Carsten Fritsch, an oil analyst at Commerzbank. “Without Saudi Arabia’s support, it is difficult to imagine that the dollar will be replaced.”
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Oil states deny secret talks on dollar
Reuters in Istanbul
07 October 2009
Big oil-producing nations have denied a British newspaper report that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the US dollar with a basket of currencies in trading oil.
The dollar eased yesterday in response to the report, which was written by The Independent’s Middle East correspondent Robert Fisk and cited unidentified sources in Gulf Arab states and Chinese banking sources in Hong Kong.
It said the proposal was for trade in crude oil to move over nine years to a basket of currencies including the Japanese yen, the yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, which includes Saudi Arabia and Kuwait.
The report comes amid a debate on the dollar’s role as the world’s reserve currency, which has come under question. For most of this decade, the United States has struggled to maintain the dollar’s value.
But top officials of Saudia Arabia and Russia, speaking on the sidelines of International Monetary Fund meetings in Istanbul, denied there were such talks. The two countries are the world’s largest and second-largest oil exporters.
Asked about the newspaper report, Saudi Arabia’s central bank chief Muhammad al-Jasser said: “Absolutely incorrect.”
Kuwait’s oil minister made similar remarks, while Russia’s Deputy Finance Minister Dmitry Pankin said: “We did not discuss this at all.”
Algerian Finance Minister Karim Djoudi said: “Oil-producing countries need to stabilise revenues but ... I don’t see a need for oil trade to be denominated differently.”
The talks in Istanbul focus on correcting big trade imbalances that can destabilise the world economy. Many economists think the dollar may have to weaken further to reduce the imbalances. Analysts said while individual countries would find it relatively easy to stop using the dollar in settling oil trades, replacing the currency in which oil is priced required a massive effort.
“I don’t think this is a likely scenario in the short to medium term,” said Carsten Fritsch, an oil analyst at Commerzbank. “Without Saudi Arabia’s support, it is difficult to imagine that the dollar will be replaced.”
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