JAPAN: Japanese finance minister not aware of newspaper report on Arab states in talks to end use of U.S. dollar for oil trading

Record ID: 343471

  • Title: JAPAN: Japanese finance minister not aware of newspaper report on Arab states in talks to end use of U.S. dollar for oil trading
  • Date: 7th October 2009
  • Summary: TOKYO, JAPAN (FILE) (REUTERS) AERIAL OF OIL REFINERY MORE OF AERIAL OF OIL REFINERY GAS STATION GAS PUMP GAS STATION STAFF PUMPING GAS INTO CAR STAFF PUMPING GAS GAS METER
  • Embargoed: 22nd October 2009 13:00
  • Keywords:
  • Location: Japan
  • Country: Japan
  • Topics: Finance
  • Reuters ID: LVA2SVW1S4DAV42G7HSQ917D24UU
  • Story Text: Japanese finance minister said on Tuesday (October 6) he is not aware of a report by The Independent newspaper that Arab states are currently in talks to end use of U.S. dollar for oil trading.
    The British newspaper reported on Tuesday that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the U.S. dollar with a basket of currencies in the trading of oil.
    The U.S. dollar eased after the report, written by Middle East correspondent Robert Fisk and monitored on The Independent's website. It cited unidentified sources in Gulf Arab states and Chinese banking sources in Hong Kong.
    It said the proposal was for trade in crude oil to move over nine years to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, the United Arab Emirates, Kuwait and Qatar.
    The dollar fell 0.7 percent against the yen to 88.91 yen, edging back toward an eight-month low of 88.23 yen hit on trading platform EBS last week.
    At a news conference, Fujii said he had no comment on foreign exchange rates.
    Asked about the story in The Independent, Fujii said he was not aware of the report.
    "I know absolutely nothing about it, nothing at all. I guess reports like that come out once in a while, but I know absolutely nothing about it," Fujii told reporters in Tokyo.
    He also explained the outcome of the Group of Seven (G7) Summit, which was held last week on the sidelines of World Bank and International Monetary Fund meetings in Istanbul.
    "I've told the G7 that the world economy must not engage in competitive devaluations," said Fujii.
    Analysts say while ending the use of the dollar as the currency used to settle oil trades between counterparties -- as Iran has already done -- would be relatively easy, replacing the currency in which oil is priced would require a massive effort.
    The report did not make clear how the change would work, and many analysts doubted it would occur any time soon, despite mounting speculation about the dominant role of the U.S. dollar in global commodity trade and as the world's main reserve currency.
    For growing oil producers and consumers, a shift to settling trade in non-dollar currencies may hold some appeal: oil exporters would be able to more easily diversify their currency reserves away from the U.S. dollar; importing nations could pay for their oil without the need to buy dollars.
    But apart from the strong political links between Gulf nations and the United States, the lack of convertibility for many Gulf currencies and China's yuan tops the list of practical hurdles for making such a shift.
    Sources with refiners in Japan, China and South Korea all said they had not been approached by any oil suppliers about changing the terms of their settlement for crude oil purchases.
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