r2i forum

Adding to already dollar's woes

"All participating leaders showed an interest in changing their hard currency reserves to a credible hard currency," Ahmadinejad said. "Some said producing countries should designate a single hard currency aside from the U.S. dollar ... to form the basis of our oil trade."
Venezuelan President Hugo Chavez echoed this sentiment Sunday on the sidelines of the summit, saying "the empire of the dollar has to end."
"Don't you see how the dollar has been in free-fall without a parachute?" Chavez said, calling the euro a better option.

True, but both have a well-known axe to grind against U.S. Neither of them miss any opportunity to diss the U.S. - its president, people or economy.

BTW, where will Chavez get to refine his Crude? By and large, only US refinaries has the capacity to refine the type of crude produced in his country. It won't be cost effective for him to sell elsewhere.

What Chavez says is less important - what he is told is more important.

here is what Spain's King told Chavez

http://ap.google.com/article/ALeqM5jgh2vZKqgbl1Os-pBPouBGXe-iPgD8T11B880 :emteeth:

>>>BTW, where will Chavez get to refine his Crude?

You mean his oil or his language? :)

I guess both oil as well as language :emteeth:

Venezuela is only about 5 days away from the U.S. Gulf Coast by tanker. Most of the Venezuelan crude oil used in the United States is heavy, sour quality crude oil. The capacity to refine this type of oil is not prevalent for Venezula in its neighborood except for US. If they have to sell it in the far away places, it is going to cost additional money.

Well.. Why would Chavez bother about economy ! :(


http://www.eia.doe.gov/pub/oil_gas/petroleum/feature_articles/2003/venezuelan/vzimpacts.htm

I know most of you in the forum may not like it, but I must say that I support Chavez in his call for removing dollar as the oil trading currency. Bearing the brunt of falling dollar are the Gulf NRIs.

As all the GCC country currencies except that of Kuwait are pegged to the dollar, they have been falling with the dollar and depreciating against the rupee. For example during the middle of last year, 1 Bahraini Dinar was getting around Rs. 121 and it is getting only Rs. 102 now.

The blue collar workers and low wage earners are the most affected than anybody else. They are hit in many ways. Their meager monthly remittances have reduced further due to appreciating rupee and combined with increased cost of living in India and above all the runaway inflation here reducing their savings has dealt a severe blow. There are many incidences of suicides among them here due to financial owes and problems faced by their families back home. My heart goes out to them, many of them whom I have spoken to are honest, hardworking and simple folk. I find the love for their country and patriotism amazing. In spite of their hard life, they never see or speak anything bad about their country.

Inflation, which was unknown in this part of the world ,(I have seen the prices of eggs, bread, milk and such essentials unchanged for the last 10 to 15 years) has been soaring in the last 1 year or so. As almost everything here is imported and come from Europe, Asia, Australia and elsewhere, with the falling dollar, the cost of imported goods have gone up. It has even made a substantial dent in the budgets of higher income earners.

The impact on business and industry has been enormous. In Dubai, the cost of construction is said to have increased tremendously that many of the big builder’s estimates have gone haywire. The full impact is not disclosed in public or not known. Hence there is tremendous pressure from the business and industry on the governments to drop the dollar peg, like Kuwait. We are eagerly awaiting the dropping of the peg of Gulf currencies and revaluation, which will see value of our assets here jump and also keep pace with the rise of the rupee.

However, personally I don’t think it will ever happen. I think the rulers of these countries are under tremendous US pressure not to do so. Should it happen, it will be a big blow to the value of the dollar and there will be global repurcussions. Even though it is never acknowledged in public, they will not dare go against the US wish. Like everywhere else, the US plays the games in her own terms, with the slightest regard for ethics or anybody else’s welfare.

I saw some sound bytes from Dubya in the media saying dollar value should be moving up soon. Not sure what those statements were based on.

#8,

As of now all these are only wishful thinking by various groups who will benefit from the change. These sound bytes have been coming for nearly a month now. There have been speculation about upward revaluation of the currency, removing the peg and letting the currency float, linking to a basket of currencies etc. etc. However the actual decision to do so rests entirely with one man in each country. It all depends on how far he will be able to hold against the US pressure.

Also, the GCC have been talking of Gulf Monetary union to have a common currency by 2010 for some years now. This I think is a clever ploy in which the US is also involved to delay the removal of dollar peg indefinitely. There are so many internal political games and sometimes it appears that each country is trying to outdo the other in making some secret deal with the US to curry some special favours.

I read a article recently that said that the country which is highly likely to remove the peg will be UAE and the least likely is Saudi Arabia . Bahrain, where I live, is not mentioned at all. With others currencies freely accepted and exchanged at almost fixed rates within GCC, I can imagine the mayhem, if one of them is delinked from the dollar while the others are not. I am keeping my fingers crossed.

The discussion brings back my original thread in which we discussed
what would happen if dollar becomes Rs25 and gas becomes $5
We are almost halfway in that direction now:emwink:
f
http://groups.google.com/group/R2I-NRI-Club/browse_thread/thread/61
cacd65e290b809/ec01eead641b9e10?lnk=gst&q=kalyanmalla#ec01eead641b9e10


http://groups.google.com/group/R2I-NRI-Club/browse_thread/thread/61cacd65e290b809/ec01eead641b9e10?lnk=gst&q=kalyanmalla#ec01eead641b9e10