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Markets react to no dollar in oil trading

Oil rigs in Culver City, Calif.

TEXT OF STORY

The dollar fell on foreign exchange markets this morning.
Traders were reacting to reports of secrets talks to dump the greenback as the main currency for trading oil. Britain's Independent newspaper carried that story. It claims that some Arab states along with China and Russia are planning moves that could eventually end the dominance of the dollar. More from our European correspondent Stephen Beard in London.


Stephen Beard: The Independent claims that countries including Saudi Arabia, the United Arab Emirates, China, Russia, Japan and France are secretly planning to sever the link between oil and the dollar. The newspaper says they want to price oil in a basket of currencies including the euro, and the Chinese yuan. The move would apparently take nine years to complete. The Saudis and the Russians have denied the story.

But currency strategist Steve Barrow says the market is taking the report seriously. He says the oil producers have every reason to move away from the dollar:

STEVE BARROW: I don't think it's surprising that countries in the Gulf, for instance, might be concerned that the dollar is weak and that doesn't help the value of their oil exports if the dollar continues to fall.

And he says we already know that China and Russia are not happy about holding most of their reserves in depreciating dollars. Many central banks have already started gradually reducing the size of their dollar reserves.

In London this is Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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