<\/p>\n
The United Arab Emirates appeared to suggest that the dollar’s dominance in global oil trade is not guaranteed if the fallout from the Iran war worsens.<\/p>\n
According to wall street journal<\/em>the head of the UAE’s central bank, raised the idea of \u200b\u200ba currency swap line with Treasury and Federal Reserve officials at a meeting in Washington, D.C., last week.<\/p>\n To be sure, the UAE has deep pockets, including $270 billion in foreign exchange reserves and trillions of dollars across sovereign wealth funds. <\/p>\n But while the UAE is not in crisis, Iran has damaged energy infrastructure and blocked oil exports by blocking the Strait of Hormuz, weighing on dollar-denominated revenues.<\/p>\n The report says that if a war with Iran triggers a further economic downturn, the swap line with the United States could provide the UAE central bank with a supply of cheap dollars to back up the dirham, which is pegged to the dollar, or to shore up foreign exchange reserves in case of liquidity shortages.<\/p>\n UAE officials also pointed to the US starting the war with Iran and said tougher availability of dollars could force them to use the Chinese yuan or other currencies for oil transactions, the people said. journal<\/em>.<\/p>\n The UAE Central Bank did not respond to requests for comment.<\/p>\n If major oil producers were to shift away from the dollar, it would pose a major threat to the dollar’s dominance. Saudi Arabia’s decision to price its exports in dollars in 1974 helped establish the dollar as the standard for all global oil trade.<\/p>\n Additionally, because oil is a major input to manufacturing and transportation, other supply chains have become dollarized, reinforcing the dollar’s dominance in payments.<\/p>\n But a war with Iran could exacerbate cracks that were already forming in the so-called petrodollar regime, Deutsche Bank analysts warned last month.<\/p>\n \u201cDamage to Gulf economies could prompt an unwinding of overseas asset savings,\u201d they said. \u201cIn this context, reports that vessels may be allowed to sail through the Strait of Hormuz in exchange for oil payments in renminbi should be followed closely. This dispute may be remembered as a key catalyst for the erosion of petrodollar dominance and the beginning of the petro-yuan.\u201d<\/p>\n The loss of the dollar’s “exorbitant privileges” will have ripple effects on other areas of global finance, including bond markets. Thanks to the dollar’s status as the world’s reserve currency, the federal government has long been able to issue government bonds at lower interest rates than investors would tolerate.<\/p>\n However, Dan Alamariu, chief geopolitical strategist at Alpine Macro, does not support the prediction of a U.S. decline. In a memo earlier this month, he acknowledged that if the Iranian regime persisted while retaining some control of the strait, it would be a “strategic setback” for the United States and a humiliation for President Donald Trump.<\/p>\n But the Gulf Cooperation Council, which includes the United Arab Emirates and Saudi Arabia, has further reasons to maintain close ties with the United States given its ties with China and Iran, Alamarieu added.<\/p>\n “The idea of \u200b\u200breplacing the oil yuan or the oil euro remains far-fetched,” he said.<\/p>\n Paul Bluestein, an academic at the Center for Strategic and International Studies, says even if the petrodollar declines, the dollar’s dominance still depends on other factors that other currencies can’t match.<\/p>\n These include the depth, breadth, and liquidity of U.S. financial markets, as well as the freedom to move funds across U.S. borders virtually unimpeded, he wrote in his paper. luck<\/em> Last month’s editorial.<\/p>\n “They account for well over half of the foreign exchange reserves held by central banks, and a similar proportion of export bills for cross-border trade, international bank loans and bond issues,” Bluestein explained. “Network effects are cementing that position. Everyone has an incentive to spend dollars because so many other people are spending them.”<\/p>\n<\/div>\n #UAE #officials #reportedly #warned #forced #renminbi #currencies #run #dollars #Iran #war #luck<\/p>\n","protected":false},"excerpt":{"rendered":" The United Arab Emirates appeared to suggest that the dollar’s dominance in global oil trade is not guaranteed if the fallout from the Iran war worsens. According to wall street journalthe head of the UAE’s central bank, raised the idea of \u200b\u200ba currency swap line with Treasury and Federal Reserve officials at a meeting in […]<\/p>\n","protected":false},"author":1,"featured_media":547,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[533,523,535,531,526,524,537,528,532,529,534,527,525,536,530],"class_list":["post-546","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","tag-currencies","tag-currency","tag-dollars","tag-forced","tag-former","tag-iran","tag-luck","tag-officials","tag-renminbi","tag-reportedly","tag-run","tag-uae","tag-united-arab-emirates","tag-war","tag-warned"],"_links":{"self":[{"href":"https:\/\/juskat.com\/index.php?rest_route=\/wp\/v2\/posts\/546","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/juskat.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juskat.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juskat.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/juskat.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=546"}],"version-history":[{"count":0,"href":"https:\/\/juskat.com\/index.php?rest_route=\/wp\/v2\/posts\/546\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/juskat.com\/index.php?rest_route=\/wp\/v2\/media\/547"}],"wp:attachment":[{"href":"https:\/\/juskat.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=546"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juskat.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=546"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juskat.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=546"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}