Tehran Dumps Dollar for Euro

[Orwellian_Ghost]

Iran's President Mahmoud Ahmadinejad has ordered the replacement of the US dollar by the euro in calculating the value of the country's Oil Stabilisation Fund (OSF).

The edict, issued on Sept 12, follows a recommendation by the trustees of the country's foreign reserves, Iran's English-language daily The Tehran Times said on Monday, citing Iran's semi-official Mehr News Agency.

The move was taken because the government wishes to protect itself from the fragility of the US economy and the weak dollar.

The OSF, which forms part of Iran’s foreign exchange reserves, is a contingency fund set aside to cushion the economy against fluctuating international oil prices.

...

http://www.arabianbusiness.com/568241-tehran-dumps-dollar-for-euro

[abelenkpe2]

1. This should be interesting.

I wonder what kind of reaction this news will cause in the markets? Any guesses?

[madeline_con]

9. Well, look what happened to Saddam Hussein when he did it.

[charlie]

2. Saddam's last words

"Hey you guys, watch this..."

[Selatius]

3. Saddam was already weak when he switched. The US gov't figured knocking him out would be easy.

Low and behold, the current Iraqi government now uses US Dollars to price crude oil, not Euros.

[madeline_con]

10. Petroleum has always been traded in U.S. dollars.

Saddam's little switcheroo wasn't about to be tolerated.

[Pavulon]

4. Paper move, just like dinner jacket.

the market functions and trades in dollars.

[aquart]

5. Today? While he's at the UN? Bad boy!

[berni_mccoy]

6. It's not a bad thing. It will increase the price of oil for the U.S. as the value of the USD drops

This will drive the economy toward more efficiency and greener technologies.

[tavalon]

7. In the short term, it is a very ouchy thing

In the long term, I absolutely agree that this is the best thing.

And today is one day I'm glad to have Obama rather than, Cheney, er, Bush as President. We'll get a nuanced rather than a nukular response. It's not like this should surprise anyone. It shouldn't surprise anyone when China stops providing us with endless money, either. That one's really gonna hurt.

[Ikonoklast]

8. So the Chinese got to exchange dollars for euros to buy oil there now.

After all, China is their largest crude customer now. Japan buys Iranian oil, and they've been paying in yen.

Minor inconvenience for them.

Matters not to the trading exchange as oil is denominated in dollars.

[AllentownJake]

12. Many theorize

Saddam's move to do this is the real reason for the Iraq war.

Don't be surprised to see the US authorize Israel to strike them now or some border conflict in Iraq spilling over demanding us to bomb their infrastructure into nothing.

[TheWraith]

13. Many theorize the WTC was blown up by aliens, too.

There's difference between theories and known reality.

[Nikki Stone1]

17. No one theorizes that.

Unless it's just you.

[muriel_volestrangler]

14. Not even that, I think

This is their contingency fund; so calculating it in euros rather than dollars means they are measuring their emergency fund in euros - so their decisions to put money into, or take money out of , the fund, will be based on its value in euros. That doesn't mean they'll say everybody has to pay in euros. It would seem to mean they consider the euro economic zone more stable than the US economy, since this is what they're doign for safety.

[AllentownJake]

11. Looks like we are going to war with Iran

This will not be tolerated.

[Statistical]

15. Why would that be?

Oil will still be sold in dollars.

Did you read the article or just the inflammatory headline?

[abelenkpe2]

16. What?

No peep of this in the US news? Or Did I miss it?

Seems like a bigger story to me. Is that not so?

[Statistical]

18. Not really OIL is still traded in Dollars.

Iran sell oils they get dollars.

So Iran ends up with lots of dollars.
Now oil fluctuates but Iran expenses stay fixed (oil revenue is used to fund govt).

To "hedge" this volatility Iran puts money aside into this fund. When oil is very low they draw from the fund, when oil is very high they add to the fund.
Now the problem is that dollar has fallen 30% against Euro. Iran buys mostly from Europe so their buying power drops when dollar drops.
They are now going to take dollars from sold oil, trade them for Euros and keep the Euros in the fund.

Not really that big of a story.

[Xenotime]

19. Smart move. I predict other countries will abandon the dollar then the US.