[james_hunter123]

What do people think the effect of a single GCC currency will have on the dominant role of invoicing oil in US$ Dollars?

High time for a single GCC currency – by Emilie Rutledge…

“The notion that it would be too difficult to set up a market for invoicing oil sales in any currency other than the dollar is quite frankly ridiculous, and is largely being propagated by those with a vested interest in the current petrodollar hegemony.”

for full article:

http://english.aljazeera.net/NR/exeres/ ... F5117B.htm

[Petrodollar]

Thanks for the article. I think the author makes some interesting points, especially these comments about the fragility of the US eocnomy based on structual problems and ideological tax cuts, risks which I have been trying to inform others about...

"There is also increasing concern over the size of America's federal debt, which is almost $8 trillion. Its budget deficit this year alone is expected to be $600 billion. In recent years the US economy has been characterised by substantial budgetary deficits. It consistently spends more than it earns.

As a result, the US is becoming more and more dependant on foreign countries willing to hold dollars in their reserve accounts and buy its Treasury bonds.

Essentially the US Federal Reserve prints paper - Treasury bonds and dollar bills - and swaps these for commodities such as oil and consumer items such as Chinese household appliances."

...but with the Iranian bourse opening in 2006, this issue is not academic....

"....If the dollar continues to decline against the euro, more states will increase the percentage of euros they hold in their reserves because the euro will be a better store of future wealth, and major oil suppliers will prefer to sell at least some of their oil for euros or currencies other than the dollar.

A strong, independent, single GCC currency is likely to attract increased levels of foreign direct investment to the region and facilitate the invoicing of some oil and gas sales in Gulf dinars."

...but given the lack of industrialization in the Gulf states, a unified currency would act rather differently than dollar, euros, yen, etc. If the dollar loses its World Reserve Currency/petrocurrency status to the euro, it will face significant resistance from the EU states, just as the US is significantly resisting the euro's encrochment into the oil market.

The wildcard is of course what happens to the global Banking System once Peak Oil becomes self-evident...and that my friend, is totally unpredictable.

Me thinks we live in interesting times...

[roccman]

http://www.cbiraq.org/cbs6.htm

A long shot, but if it appreciates ever so slightly one can make boat load.

http://www.dinartrade.com/

[roccman]

Link

$this->bbcode_second_pass_quote('', '"')A revaluation of the GCC currencies is needed now and the region should begin preparations to shift their currencies away from a peg to the dollar to managing their currencies against a basket of currencies with which the Gulf trades," Standard Chartered Bank said in a report.

According to the report, given that oil, the region's main export, is priced in dollars, there is a strong case to be made for sticking with a dollar peg until the economies diversify - or certainly diversify further - away from energy. If that is the case, there will certainly be a need for a large revaluation of up to 20 per cent versus the dollar, now.

Faced with the prospects of further plunge in the value of the dollar and a further drop in interest rates, the Gulf states are expected to allow a creeping appreciation of their currencies, starting with modest gains against the dollar.

Trends: Plunging greenback

The plunging dollar, struggling to find a bottom on a trade-weighted basis, has depreciated by more than eight per cent since the beginning of the year and by 20 per cent in real terms since the beginning of 2002. The dollar depreciation appears likely to continue - perhaps aided by a Federal Reserve that is more focused on preventing a recession than on defending the currency.