Iran Begins Shift from Petrodollar to Eurodollar
Written by Daniel Maldonado
Friday, 08 December 2006
Two Iranian news agencies are reporting that Iran has begun its long anticipated move away from the U.S. Dollar to the European Union’s Euro as the (Petrodollar and Eurodollar, respectively) method of payment for its oil transactions.
The Iran Daily and the Tehran Times are both reporting that the Iranian Minister of Economy, Davoud Danesh-Ja’fari, has stated that Iran is now keeping its dollar based transactions to a minimum. Iran, the world’s fourth largest oil producer, has had plans recently for opening its own oil bourse. This is intended to compete with London’s and New York’s oil exchanges, who cozily share the oligopoly.
But recently China and before them, Russia announced that they too had intentions on creating their own oil exchanges. Russia’s plan also includes using the Ruble instead of the Petrodollar or the Eurodollar.
Meanwhile, investors’ expectations have sent the dollar plummeting to a 20 month low on news that Arab states would be cutting back on their dollar inventories.
But the dollar remains king. Millions of transactions done worldwide every day could eventually lead investors to see a bargain and step in and buy the dollar, or so the U.S. hopes. And at what price will the sellers become buyers?
With Iran, China and Russia offering new products and developing their own markets and with the Arab nations cutting back on their dollar inventories, we could be witnessing the end to the dollar hegemony.