Dollar Declines; U.A.E. Selling U.S. Currency, Buying Euros

[TexasLawyer]

Another assault on the dollar's value...

Dollar Declines; U.A.E. Selling U.S. Currency, Buying Euros

By Min Zeng and Annie Pinkert

Dec. 27 (Bloomberg) -- The dollar dropped the most in more than a week against the euro after the head of the United Arab Emirates central bank said it will convert some of its reserves of U.S. assets into the European currency.

The U.A.E. is among oil exporters including Iran, Venezuela and Indonesia that are looking to shift their reserves into euros or price the commodity in the 12-nation currency. The dollar also declined the most this month versus the yen. The U.S. currency pared some of its losses after government data showed sales of new homes rose more than economists forecast last month.

``The report is hard evidence that diversification is happening,'' said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto. ``This is negative for the dollar in a broad sense as it reflects falling confidence in the currency.''

<snip>

The U.A.E. will switch 8 percent of its foreign-exchange reserves from dollars into euros before September, U.A.E. Central Bank Governor Sultan Bin Nasser al-Suwaidi said during a Dec. 24 interview in Abu Dhabi. The U.A.E. has started ``in a limited way'' to sell part of its dollar reserves, he said. The total value of the U.A.E.'s current reserves is $24.9 billion, 98 percent in dollars and 2 percent in euros, al-Suwaidi said.

<snip>


http://www.bloomberg.com/apps/news?pid=20601085&sid=a5NCCnX8rCf0&refer=europe

[roamer65]

1. Pretty soon they'll all be crowding for the door.

Last one out is a "rotten egg".

[TexasLawyer]

2. This is fresh on the heels of Iran's announcement

The Times December 22, 2006

Iran turns from dollar to euro in oil sales
Carl Mortished, International Business Editor

Iran is selling more of its oil for payment in euros than dollars as it seeks to shift its foreign currency reserves away from the depreciating currency of its political enemy, the United States.
The world’s fourth-biggest oil exporter has inserted a clause in its oil contracts allowing it to request payment in alternative currencies.

Gholanhossein Nozari, the managing director of National Iranian Oil Company, said that 57 per cent of Iran’s income from oil exports was now received in euros.

The move reflects a political desire for less reliance on the dollar, as well as a need to avoid further depreciation in currency reserves. Iran’s dollar holdings are thought to have fallen from 40 per cent of currency reserves to just a third.

Iran announced plans in 2004 to develop an Iranian oil bourse, a commodity exchange that would become a Middle Eastern rival to the major exchanges in New York, London and Singapore, which set benchmark oil prices.

<snip>

http://business.timesonline.co.uk/article/0,,16849-2514985,00.html

[Gman]

3. I talked to a friend yesterday who had just returned from Europe on 12/24

she said they paid a little over $100 for a group of 5 of them to have coffee and cocoa at a little cafe in (I think it was ) Rome. She also said that often they would pay for things with Euros and would get US dollars as change. The people there were getting rid of dollars whenever they could. No mystery to that as the dollars lose value constantly.

[pitohui]

6. she could have insisted on euros for change

i'm just back myself and no one even tried to pull that on me but i'm not sure most people realize that i'm an american unless they ask, i wear a scarf and all and get welcomed pretty often w. bonjour :-)

the dollar is deader than a doornail tho, that much is true

[SpiralHawk]

4. The U.A.E. ? Aren't they Commander AWOL's bosom cronies?

The ones he wanted to hand over our U.S. ports to?

What a bunch of pals.

Commander AWOL keeps some strange company.

[jamesinca]

5. Dubai World ports deal

Also home to some of the 9/11 hijackers. Mostly business friendly people of Bush.

[JCMach1]

11. Not Bushies... or particular friends of his

The UAE are the Swiss Bankers of the ME.

Don't believe the hype. I personally know the President of the UAE. HE is NO particular friend of Bush. He does, however, love the US.

[motocicleta]

7. Kevin Phillips, Wealth and Democracy

He lays out the ways in which the USA now looks very much like the imperial powers that preceded it (Spain, the Netherlands, and England) in turning from manufacturing to finance. Ultimately, all three of those world dominating powers got screwed badly for the same mistakes we are so very guilty of now. If you lead the world in producing things people need, then decide to make money faster through finance and outsource your manufacturing and production, essentially you will screw the pooch; it's just a question of when. It appears we are, right now, getting a clear idea of the "when" regarding the US. I.e., right now.

[IndianaGreen]

8. So it begins... I hope it accelerates!

Iran and Venezuela are switching to euros just out of self-defense against Imperial America. Bush won't be able to print more dollars to purchase hydrocarbons overseas.

Wait until the Chinese stop financing our debt.

[Systematic Chaos]

9. It will likely kill me when the economy collapses.

And I'm not kidding about that one bit. However, for the sake of the nation, I have to agree that it's kind of down to whatever works to stop * and his imperialistic madness. :cry:

[VegasWolf]

15. I doubt the Chinese will stop, this is just too wonderful for them. While Amerikans

are buying cheap WalMart shit, the Chinese are buying Main Street, USA.

[harun]

16. Couldn't agree more

If China tanked the dollar, which it could then the U.S. may not be able to pay them back. They don't want to take away our ability to pay them back. So instead they simply make us slaves.

[Bandit]

10. US dollar will never again have the same status

Bush* has done irrepairable damage to the US financial markets. Once these countries switch they will never switch back. Others will follow as the dollar declines even more. A vicious cycle will set it. Why should any government invest in a dollar in rapid decline? They would be fools. Would you by stock knowing it was on a steady and unrelenting decline? No smart money person would..

[indypaul]

12. Who was it that said

"deficits don't matter"?

[TexasLawyer]

13. good point from an article today

Falling U.S. dollar pushes Emirates to rethink reserves

By JIM KRANE

2006-12-28 09:21:00

<snip>

The sale itself is a small one, worth about $2 billion. But the implications of a cash-rich friend of Washington selling off its dollars is a sign that central banks elsewhere may be looking to cut losses from a dollar widely expected to slip further in 2007.

"It's a prudent move and it's indicative of broader thinking," said Simon Williams, HSBC's chief Middle East economist. "It's another factor that will exert downward pressure on the dollar." The dollar fell to 1.3132 euros in European trading Thursday, compared with 1.3123 in New York on Wednesday.

A bigger worry for the U.S. Federal Reserve Bank is that the six energy-rich Gulf Arab countries may consider converting dollar holdings in their far larger government investment funds, which Williams said keep more than $1 trillion under management. Gulf governments typically do not release the compositions of those funds.

"If they're moving those assets out of the dollar on the same scale, that's a much bigger deal," Williams said.

<snip>

http://money.canoe.ca/News/Economy/2006/12/28/3040915-ap.html

[VegasWolf]

14. They are just doing what Dick Cheney did, according to Barron's he moved most

of his wealth (100 million) into euro backed tradeables. Cheney doesn't want the rest of us to follow the leader though.

[Ezlivin]

17. Perhaps that's why the Saudi ambassador suddenly resigned?

Prince Turki al-Faisal, Saudi Arabia's ambassador to the United States, flew out of Washington yesterday after informing Secretary of State Condoleezza Rice and his staff that he would be leaving the post after only 15 months on the job, according to U.S. officials and foreign envoys. There has been no formal announcement from the kingdom.

The abrupt departure is particularly striking because his predecessor, Prince Bandar bin Sultan, spent 22 years on the job. The Saudi ambassador is one of the most influential diplomatic positions in Washington and is arguably the most important overseas post for the oil-rich desert kingdom. (Source)

Rumors have it that Saudi Arabia also wants to switch, at least partially, to Euros.