Venezuela to price oil in euros

[Paciente]

30 Dec 2005 16:22 GMT


OIL/DOLLAR: Friday, Venezuela's central bank announced plans
approving the use of the euro in order to service demand from foreign
companies as well as to further distance the country from dollar
dealings, according to a report in Fri's Wall Street Journal. "No
explicit rate of conversion from the bolivar to euro has been set, but
transactions will take into account the rate of the dollar vs the euro
at a particular point in time," the WSJ says. In Oct. Venezuela's
decision to transfer 50% of its dollar reserves (about $20 bn) to the
BIS, potentially for later purchases of euros and other FX was a
one-day factor driving the dollar lower, traders remind. Analysts have
warned in the past that if more petro countries decide to price oil in
euros, the dollar could suffer. So far, only one other oil country has -
Iraq in 2000, when Saddam Hussein decided to deal a blow to the US by
selling oil only for euros. Conspiracy theorists to this day, maintain
that this was one of the real reasons for the current Iraq War.