Tokyo, April 17 (Bloomberg) -- Pertamina, Indonesia's state oil company, dropped a bombshell recently. It's considering dropping the U.S. dollar for the euro in its oil and gas trades.
With war unfolding in Iraq and a mysterious pneumonia spreading around Asia, few noticed. News that Indonesian government officials favor the euro also fell through the cracks. Yet it could have major implications for the world's biggest economy.
Other Asian countries may not be far behind any move in Indonesia to dump the dollar. The reasons for this are economic and political, and they could trigger a realignment that undermines U.S. bond and stock markets over time.
Indonesia's rationale: The dollar may be the world's reserve currency but it has become too volatile. ``One thing is for sure, the adoption of the euro as an alternative means of payments could be an effective solution to speculative dollar-oriented dealings,'' Indonesia's Vice President Hamzah Haz said last month.
Conspiracy theorists can rest easy. None of this has anything to do with the fact Indonesia is home to the world's largest Muslim population. Rumors of Southeast Asian Muslims and Arabs banding together and dumping dollars to stick it to the U.S. ignore the very real economic justifications for it. This also isn't necessarily about Iraq-related tensions.
Last year's accounting scandals shook many Asians' trust in the U.S. economy. The view here is that little has been done to reform the system. News that a unit of Halliburton Co., formerly run by U.S. Vice President Dick Cheney, already won a post-Iraq war contract has Asians buzzing about American-style crony- capitalism -- much like the U.S. used to complain about Asian cronyism.
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