Will the Iranian Oil Bourse Threaten the Dollar?

[dotcoma]

Iran continues to push its weight around. Now it proposes to begin pricing oil in euros. Unfortunately, just about everyone would benefit—except the United States. For half a century, the American dollar has been the reserve currency of the world. Seventy percent of all currency reserves are in American dollars. This has a lot to do with the fact that oil, the most important commodity traded in the world, is mostly priced in U.S. dollars. The majority of countries, being oil importers, have to buy their oil in U.S. dollars. This, together with related economic considerations, encourages them keep most of their foreign currency in dollars. The debt-burdened U.S. economy is dependent upon this high demand for its currency in order to remain afloat. The day this demand comes to end will portend disaster for the American economy. There is a move underway, however, to effect just such a reversal of the dollar’s fortunes. In particular, the world’s second-largest producer of crude oil—and declared enemy of the United States—Iran, seeks to end the predominance of America’s currency. Several weeks ago, Tehran reconfirmed that it plans to create a euro-based exchange in oil—to compete with the London and New York dollar-denominated oil exchanges, both American-owned. The proposed March 2006 launch of the Iranian oil bourse (iob), if successful, would give the euro a foothold in the international oil trade, solidifying its status as an alternative oil transaction currency. This, in turn, could be a catalyst for a major currency flight from the dollar to the euro—and a disaster for America. The iob will see crude oil, petrochemicals and other commodities of the same kind traded in euros. Iran no doubt has multiple motives for making this move. For one, it makes sense economically, especially since the European Union is Iran’s biggest trading partner. But more importantly, it would strike a blow to Iran’s archenemy America—and, by hoping to make Iran the main hub for oil deals in the region, help drive the Islamic Republic forward in its quest for regional supremacy.

full article http://www.thetrumpet.com/index.php?...rticle&id=1704

What do you think about this? Is this why we invaded Iraq? Saddam was going to switch his Oil to the Euro too...right before we invaded.

[Zeebadee]

Bush's "conservative fiscal policies" have made us extremely vulnerable to economic warfare. We are financing our huge deficits, as well as his war, by borrowing in the form of selling U.S. government bonds. If better investment opportunities become available, we will have to raise interest rates to keep foreign investment money coming in to cover our deficits. China is currently buying $15 Billion a month, the loss of which could have a significant effect on our economy. There may be changes in that investment coming:

http://msnbc.msn.com/id/10736596/

[Disinterested]

Quote by: dotcoma full article http://www.thetrumpet.com/index.php?...rticle&id=1704 What do you think about this? Is this why we invaded Iraq? Saddam was going to switch his Oil to the Euro too...right before we invaded.

In fact, despite the u.s. horrific budget deficts, current account deficits, and trade imbalances, the dollar has been strengthening against the euro of late. Why? Western europe is in long term population decline and has a higher median age and much higher state funded pension obligations than the u.s. government making the u.s. debt relatively benign in the market's eye. Furthermore, the u.s. economy is far more dynamic than the euro zone's which makes the USD the safest currency in the world.

[jose]

Quote by: Disinterested In fact, despite the u.s. horrific budget deficts, current account deficits, and trade imbalances, the dollar has been strengthening against the euro of late. Why? Western europe is in long term population decline and has a higher median age and much higher state funded pension obligations than the u.s. government making the u.s. debt relatively benign in the market's eye. Furthermore, the u.s. economy is far more dynamic than the euro zone's which makes the USD the safest currency in the world.

"The Federal Reserve's greatest nightmare is that OPEC will switch its international transactions from a dollar standard to a euro standard. Iraq actually made this switch in Nov. 2000 (when the euro was worth around 82 cents), and has actually made off like a bandit considering the dollar's steady depreciation against the euro. (Note: the dollar declined 17% against the euro in 2002.) http://www.ratical.org/ratville/CAH/RRiraqWar.html

the Euro/dollar rates change all the time in 2000 one euro bought 82 cents,now one euro buys$1.23 a gain for the euro of 41 cents or 50% on its value of five years ago. http://finance.yahoo.com/currency/c...=USD&amt=1&t=5y

[Disinterested]

You seem to omit that the U.S. had an economic embargo against Iraq and they were just lucky that the euro went on a run against the dollar.

You may disagree, but the dollar is not going to lose its status as the world's reserve currency of choice anytime soon.

[jose]

"An average American has to ask himself this question, 'If the two richest men in the world are abandoning the dollar, why should I stay in it?'"Citing widening U.S. trade and budget deficits and a federal debt of $7.62 trillion, Gates said in a TV interview at the World Economic Forum in Switzerland last weekend he expects the dollar to extend its three-year decline.

"I'm short the dollar," Gates said, according to Bloomberg News. "The ol' dollar, it's gonna go down."
http://www.infowars.com/articles/eco...rom_dollar.htm

[Samildanach]

I do disagree. I wouldn't be surprised if it lost primary status by as early as 2010.