Currency traders who have done their homework are no doubt
well aware that one of the countervailing forces to the Dollar’s decline is the
so-called petrodollar phenomenon. In
short, because oil contracts are settled in USD, the global demand for USD is
held artificially high. However, due
primarily to the rapid decline of the Dollar, the members of OPEC are studying
the feasibility of pricing oil in terms of a basket of currencies, rather than
solely in terms of Dollars. This
proposal is still in the earliest stages of planning, and it’s not yet clear
exactly how it would work. One thing is certain: if such a change were
implemented, the decline of the Dollar would accelerate. OPEC is scheduled to hold several high-level
meetings over the next month, which should produce further developments. Reuters reports:
Venezuela's
Energy Minister Rafael Ramirez said…“The need to establish a basket of
currencies ... will probably be a point of discussion in the next OPEC summit.”
Read More: OPEC to study currency basket for pricing
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