Ditching the dollar -- sort of
Nefarious plot or nothing to write home about? Bloomberg reports:
Iran, the world's fourth-largest oil exporter, will calculate its fuel and other overseas revenue in euros rather than dollars, the Oil Ministry said.
“All oil and foreign revenue will be calculated in euros,'' the ministry said in a report released through its in-house press agency Shana. “It has also been decided that future accounts of various executive organizations will be based in euros.''
Iran has repeatedly said it would increase use of euros in international trade. Hojatollah Ghanimifard, executive director for international affairs at National Iranian Oil Co., the state- run monopoly producer, reaffirmed today all its sales contracts are still quoted in dollars. The U.S. is pressing the UN to impose sanctions against Iran because of its nuclear program.
The statements from Iran are “not very clear,'' said Amelia Torres, spokeswoman for European Union Monetary Affairs Commissioner Joaquin Almunia, in a daily briefing in Brussels.
Which leaves our editors to ponder the significance. Addison Wiggin sounds this cautionary note:
I'm going to be purposely naive and obtuse: With currency markets as liquid as
they are… why should we care what currency Iran is pricing their oil in?
It seems to me that the pricing issue is purely psychological. It's no
secret that Iran wants to do business outside the dollar, so the impact
should be minimal, if any, on decisions by the world's currency traders.
Isn't the real threat to the dollar that Iran, other OPEC nations, and
China, India, South Korea et al, begin storing their assets in euros… or
something other than dollar-denominated goodies?
I notice in the article the Iranians are lightening up on gold and buying
euros with those proceeds, too. That doesn't seem like a good move…
Kevin Kerr of Resource Trader Alert agrees:
It seems purely psycological indeed, much like when OPEC cuts production and crude initially rallies and then everyone cheats and the price drops back down. The actual impact of any cut is often negligible. I assume this is the same, but it's still bears watching.
And while we're on the subject…Whatever happened to that Iranian oil bourse? It never did open in March (a planned date that some people suggested was the real reason the Fed stopped reporting M3 at that time). By October, I'd noted in this space that the plans were, well, still in the works, and now my search for news on the matter turns up nothing.