A spot of current affairs. The fate of the dollar is very much linked to its’ use in the oil trade. OPEC are a key element in any change and not much changes in OPEC without Saudi approval.
The fate of the dollar currently rests entirely on the voluntary pegging of the Saudi riyals exchange rate with the dollar.
As with ECB pronouncements on the future role of the dollar earlier in the year one wonders why SAMA the Saudi institution controlling the arrangement was compelled to announce in November that the peg ‘benefits’ the kingdom.
The fact that Kuwait exited their own peg arrangement and thus also exited the monetary framework based on dollar pegging that was core fical policy behind the new ‘gulf’ unitary monetary policy/currency earlier on the year means that there is clearly some polar opinion on the dollar in OPEC.
The Saudis’ for historical reasons are the greatest defenders of the dollars role in oil trade.
The Saudis themselves cannot cease the dollar oil trade and trade in Euros while their own economy is pegged to the dollar.
The death knell for the dollar will be a SAMA decision to remove the peg.
This is enables a unilateral OPEC decision to move the oil trade out of dollars.
With the next OPEC president hailing from Ecuador and taking his place in January, a country which currently stands in an unfriendly posture towards American foreign and oil interests with the move away from the dollar next year looks more probable.
Venezuela and Ecuador are in a state of ‘mini cold war’ with Colombia, the regional proxy for the American Empire.
Like Iran, Venezuela has been active in promoting an anti-dollar position in the oil markets.
The next OPEC meetings take place in December 22 and January in Vienna (OPECS HQ).
Of course OPEC will fire the dollar as the oil trades currency, how and when are the issues.
Expect the realignment of gulf monetary policy, the abandonment of the dollar peg, introduction of a new peg and shift of the oil trade into Euros soon.
The magic trick will be to do this without triggering a plunge and disturbing the carefully managed monthly 2.5 cent fall of the greenback.
Tags: Collapse, Currency, decline, dollar, economics, economy, Ecuador, Empire, euro, Flat Currency, Imperial, Kuwait, riyal, SAMA, Saudi, Venezuela
December 13, 2009 at 9:10 pm |
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