Arab states have undertaken steps with China, Russia, Japan and France to stop using the dollar for oil trades, the British daily The Independent reported yesterday, but this was denied by Kuwait, Qatar and reportedly other nations.
Despite the denials, the story sent the dollar sliding against rival currencies.
In turn, that sent gold prices surging to a record high of $ 1,043.78 an ounce, as the dollar-denominated precious metal became cheaper for buyers using stronger currencies.
It comes as the United Nations called yesterday for a new global reserve currency to end dollar supremacy, which has allowed the United States the “privilege” of building a huge trade deficit.
“In the most profound financial change in recent Middle East history, Gulf Arabs are planning — along with China, Russia, Japan and France — to end dollar dealings for oil,” The Independent newspaper reported yesterday.
They would instead switch “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 (GCC), including Saudi Arabia, Abu Dhabi, Kuwait and Qatar,” the paper added.
Jane Foley, currency analyst at Forex.com, said the report was “another chapter in the plot against the dollar as the world’s most dominant reserve currency.” She added: “The dollar may be falling from grace, but it remains the case that since there are no alternatives its fall from pole position will be slow.”
Kuwaiti Oil Minister Sheikh Ahmad Abdullah Al Sabah denied the report. “Not at all,” Sheikh Ahmad said when asked by journalists to comment on The Independent story. “At our level, no. We have never discussed or proposed this,” he said, adding that he was “unaware” of any Gulf state making such a proposal.
Qatar’s Oil Minister also flatly denied the report.