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Price of Oil will be Quoted in Chinese Renminbi?

Middle East : 31 March 2010

Analysts have predicted that the US dollar has now significantly depreciated on all foreign exchange markets and has much less clout than before due primarily to its over dependence on foreign credit over the last couple of decades. Over the next ten years it has been forecast that the US dollar will depreciate quite a lot and eventually it will no longer be the primary currency used in the Oil Invoicing system.

The question Analysts now find themselves asking is what is likely to replace it and to what extent? It is now being suggested that the new system applied may become known as a tripartite reserve and oil invoicing system, this would involve the Americans using dollars, the Europeans using the Euro and much of Asia using the renminbi.

This however is not likely to occur anytime soon as the dollar at present seems to be difficult to change from and this whole process is not something that can happen over night as many factors would have to be taken into consideration first. At the present time approximately 66% of all central bank reserves are held in dollars, about 80% of all international trade transactions are transacted using the dollar and more than 45% of world debt has been calculated and enacted using dollars.

The euro bond market is currently a lot less well established and significantly less versatile than the US dollar at present and it is only now in the last few years that China has advocated the use of renminbi in many of its foreign trade transactions so any move away from the dollar is likely to take sometime yet but it is now well established that it will devalue quite a lot in the coming years and other alternatives are being looked at.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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