Posted on 05/16/2006 3:09:54 AM PDT by familyop
TEHRAN, May 15 (UPI) -- Iranian President Mahmoud Ahmadinejad announced Friday that in July Iran will abandon dollar payments for its oil and natural gas exports in favor of euros.
The move comes amid a standoff between Tehran and Washington over Iran's nuclear fuel enrichment program. The Bush administration insists the program is cover for a nuclear weapons program, a charge that Iran denies.
All current international oil transactions on the New York Mercantile Exchange and London's International Petroleum Exchange are priced in dollars.
Middleeastforex.com reported May 13 that Ahmadinejad announced the change Friday during a visit to Baku, Azerbaijan.
Many political observers see the decision as an attempt to pressure Washington, which is attempting to line up other U.N. Security Council members to act against Iran for its nuclear policies.
Iran has also proposed establishing a euro-based Iranian oil bourse to compete with NYMEX and the IPE. The proposal was first put forward in the beginning of the Third Development Plan (2000-2005), and began to receive serious attention in 2005.
Some observers speculate that the Iranian switch to euros could negatively affect the dollar, as many central banks from oil importing nations could choose to stock up their currency reserves with euros rather than dollars.
If this is going to be a trend (i.e. in Venezuela and elsewhere) the US have a severe problem.
I understand the main point, but not the intricacies, I suppose. Who benefits from this? China and the yuan?
I don't know much but tend to agree. The euro currency countries need a gradual lowering of the euro in order to adjust and continue to export enough products for stability. A rapid, though temporary rise in the euro value will hurt producers in those countries to least a small extent.
We need to do the same with gradually lowering our dollar relative to other currencies (the yuan, for one). Although my hardly educated guess is toward a small bump downward, we'll can have a much easier ride than the euro folks (given that no idiotic panic or other significant economic event occurs).
Nope.
If a currency of a nation is used outside out its boarders in big dimensions for store of value or transactions so this poses especially unter the aspect of growing seignorage-profits but also because of the security of exchange rates and smaller transaction-rates a great advantage over other nations.
Beside of this the influence of a nation whose currency is used as a "key currency" is growing in the relevant circles (IWF, G20, G8, etc.).
The benefit for the EU will be much higher than the costs if they manage to push down the dollar as the #1 currency on this planet.
if the dollar collapses (oil and gas trade in euro is a nice try on that) both of our economies went down in flames but I cannot imagine our central banks will let that happen.
It hurts though.
Saddam tried to shift the bourse to Euros too.
I would guess Iran is trying to get France, Germany on its side? And to try to slide all other Oil-producers (apart from Britain and Canada) away from dollars?
are you serious ?
We (D) are an exporting nation and a big client of ours still is the US - a quite reliable and political benign partner compared to russia, iran, india and china btw.
Brasil is ok though ;)
We can kiss our economy good night if we can't sell volkswagens and daimlers in the US.
They cough - we get H5N1.
Probably a forlorn hope.
they must be mad they think we are on their side just because they use our currency. An atomic WWIII is just a too big price paid for questionable valuta deals.
Frankly I don't believe Iran makes even a slight dent in the use of the dollar world wide. The total value of oil trade is small relative to all other trade.
lol the $ will fall and be very hard to catch once a remarkble ammount of oil deals will be taken away from the greenback.
Checked the price of gold lately ? You think that's a strong dollar you smell ? The new geenspann now whatshisname (something german sounding) can rise interest all he wants the $ keeps falling at the moment. Add this to that, count in the trade gap and the covered inflation in the US and europe, let that be an initial explosion for the overheated real estate market...
Wait a minute i got to sell stocks ;-)
...good side effect might be that oil get's cheaper in the end.
You need to read #16. The currency passed to oil producers is minescule (couple hundred billion per year) compared to forex volume (2 trillion a day). Both of those though dwarf the transactions in gold: a great store of value, but much too rare to use as currency.
Translation? My view is the carry trade, rate swaps and arbitrage are so dominant that being the #1 currency doesn't pay as much as it used to. Most dollars being held in reserves are not there to serve as currency, they are there because economic policy is currently to loan money to Americans so they can buy imported crap. That will end and the so will the collecting of all those dollars.
I thought the 'EU' was demanding Iran quit their uranium enrichment and now Iran wants to get paid in 'euros'? What happens if the EU refuses?
They do this they are signing their own death warrant.
Related thread
http://www.freerepublic.com/focus/f-news/1627648/posts
Thank you for the ping (I'll be here soon).
The dollar's already affected and nobody's going to help Uncle Sam. We shouldn't be surprised.
Iran thinks it'll run the exchange markets? lol.
Iran is cornered.
Still, it just shows that Iran hasn't yet entered the big world of "economics" -- as in, "thinking" this won't be balanced and countered by free market capitalism.
Iran exports oil to Europe, so it makes sense for them to trade in Euros. I don't think it means a thing in toto. Europe was going to buy their oil from Iran whether in dollars or euros. The value of the dollar is not determined by Iranian oil shipments. The dollar trades on our competitiveness relative to other currencies/economies. The European economy is stillborn and the Iranian economy barely registers worldwide.
BINGO.
Exactly.
And besides, Iran is a Terrorist State, last I heard. And ya just know all those same countries found "guilty" in the Oil4Food Scam are just pining to be included in another scam.. eh? :)
The total value of all oil transactions (each day) is less than 1% of the total value of US currency transactions (each day.)
Iran moving to the Euro will have no effect whatsoever. The entire oil market shifting would have very little impact as well.
dollar is under attack tonite here in asia -
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