Tuesday, October 6, 2009

The U.S. Dollar Demise: Arab Countries, China, Russia, Japan, France to Stop Using USD

In a perhaps ultra hyped report, The Independent of the U.K. reported today that the Gulf states along with China, Russia, Japan and France are planning to stop using the U.S. Dollar for oil, shifting instead to a basket of currencies including the Yen and Yuan, the Euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

The independent says it would be "the most profound financial change in recent Middle East history". It affirms that secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars, and that the plans were confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong.

The Chinese believe, for example, that the Americans persuaded Britain to stay out of the euro in order to prevent an earlier move away from the dollar. But Chinese banking sources say their discussions have gone too far to be blocked now. "The Russians will eventually bring in the rouble to the basket of currencies," a prominent Hong Kong broker told The Independent. "The Brits are stuck in the middle and will come into the euro. They have no choice because they won't be able to use the US dollar."

"These plans will change the face of international financial transactions," one Chinese banker said. "America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."
UPDATE, Denials, from Reuters: "LONDON, Oct 6 (Reuters) - The dollar jumped across the board on Tuesday, trimming losses after Saudi and Russian authorities denied a media report saying Gulf Arab states were considering using currencies other than the dollar to trade oil." However, gold is still spiking as of 8:41AM

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