On April 6 and 7 Gulf central bank governers plan to meet to discuss removing obstacles to planned monetary union at a meeting in Doha, Qatar. The Gulf countries are under pressure to revalue in the quickest time to minimize effects on their economies. The countries are planning a joint revaluation against the dollar in an effort not to hinder plans for a single currency in 2010.
The implementation of new regulations along with discussions into the depegging. Weak Gulf currencies are dettering foreign labor from choosing jobs in the region. Recently foreign workers called a strike to demand higher wages as inflation soars.
“The meeting will look into the matter of preparing for monetary union between states of the Gulf Cooperation Council, and ways to speed up performance and remove obstacles”
- Central bank of Kuwait statement
The 6 Arab gulf countries will be meeting to discuss the revaluation of their currencies against the US Dollar, amid soaring inflation and falling interest rates.
The Doha-meeting is about removing obstacles to the planned monetary union.
It is to be hoped that the Gulf Central Bank Governors will indeed decide to depeg their currencies from the US dollar.
On April 20-22,
at its extraordinary meeting which it has called for
on the sidelines of an oil producer-consumer conference in Rome on these dates,
OPEC will then be able to decide to price oil in Honest Money.
OPEC To Hold Informal April Meeting In Rome
by Majdoline Hatoum and Natalie Obiko Pearson
Dow Jones Newswires
Tuesday, April 01, 2008
SNIP
LONDON, April 1, 2008 (Dow Jones Newswires)
http://www.rigzone.com/news/article.asp?a_id=59257
SNIP
The Organization of Petroleum Exporting Countries will hold an informal meeting on the sidelines of an oil producer-consumer conference in Rome later this month to discuss whether current oil market developments warrant calling a special session to consider adjusting output, OPEC sources said Tuesday.
OPEC must call extraordinary meeting now!
March 8th, 2008 by ivo
http://bphouse.com/blaze/honest_money/2008/03/08/opec-must-call-extraordinary-meeting-now/
SNIP
[OPEC, the Organization of Petroleum Exporting Countries,’s President Chakib Kheli said [early last month] that he and OPEC’s secretary-general were authorized to call an extraordinary meeting or hold phone consultations “at any time, depending on the pressures on the market” — an apparent gesture to ease global economic jitters.
“ (OPEC to maintain current output; crude hits new highs
Associated Press
3/6/2008 3:33 AM
http://www.observer-reporter.com/OR/Story/03-06-f0270-BC-OPECMeeting-12thLd-Writethru03-05-0981)
Why not try to ease the global economic jitters by pricing oil in euro or gold?
From the outset, it was clear that the interest rate policy of the European Central Bank did serve a multiple stratego: euro-stability as an alternative to the dollar-regime.
Ivo - I tried to understand your point, then i gave up.
C&N, thank you for drawing my attention to the fact that my post was not clear.
Let me try to reword it as follows:
==
The Doha-meeting is about removing obstacles to the planned monetary union.
It is to be hoped that the Gulf Central Bank Governors will indeed decide to depeg their currencies from the US dollar.
On April 20-22,
at its extraordinary meeting which it has called for
on the sidelines of an oil producer-consumer conference in Rome on these dates, (1)
OPEC will then be able to decide to price oil in Honest Money such as gold or euro. (2)
Ivo Cerckel
NOTES
(1)
OPEC To Hold Informal April Meeting In Rome
by Majdoline Hatoum and Natalie Obiko Pearson
Dow Jones Newswires
Tuesday, April 01, 2008
LONDON, April 1, 2008 (Dow Jones Newswires)
http://www.rigzone.com/news/article.asp?a_id=59257
SNIP
The Organization of Petroleum Exporting Countries will hold an informal meeting on the sidelines of an oil producer-consumer conference in Rome later this month to discuss whether current oil market developments warrant calling a special session to consider adjusting output, OPEC sources said Tuesday.
(2)
OPEC must call extraordinary meeting now!
March 8th, 2008 by ivo
http://bphouse.com/blaze/honest_money/2008/03/08/opec-must-call-extraordinary-meeting-now/
SNIP
OPEC’s President Chakib Kheli said [early last month] that he and OPEC’s secretary-general were authorized to call an extraordinary meeting or hold phone consultations “at any time, depending on the pressures on the market” — an apparent gesture to ease global economic jitters.
Why not try to ease the global economic jitters by pricing oil in euro or gold?
From the outset, it was clear that the interest rate policy of the European Central Bank did serve a multiple stratego: euro-stability as an alternative to the dollar-regime.
==
I hope this makes sense,
If not, please delete all my nonsense and please accept my sincere apologies.
Ivo - I get your point, but historically EVERYTHING is priced to the US Dollar. There is no significance to the currency or the country. I could price Oil to wheat or Euro, and still receive the same amount as a US Dollar-denominated barrel. Today, we price Oil to Dollars, if we priced it in Euro’s there would be no effect on the rise, fall, stability, or volatility of the commodity. One more thing, the revaluation of the Gulf currencies is separate from OPEC. Kuwait is an OPEC country that revalued even though its a member of the GCC.
C&N,
You mean oil producers are happy to receive what is AT PRESENT a worthless piece of (green) paper for their oil?
(That piece of paper can moreover lose value between the moment they receive it and the moment they convert it to tangible wealth.)
At present some OPEC-members, those whose currencies are pegged to the dollar, need to have some of this worthless piece of paper in their reserves.
So if the GCC depegged its currencies, the GCC-members of OPEC will certainly no longer need dollars.
I suppose they import more from euroland than from dollarland (because euroland is geographically closer). So they need euros not dollars.
You see, since Aristotle, there is a logical law or law of thought which is known as the Principle of Non-Contradiction (PNC).
As I said, this is a law of thought and not a law of reality. Reality is not submitted to the Principle. Thought is.
The Principle says that it is impossible to be and not to be at the same time and in the same respect.
In Aristotle’s words:
It is, that the same attribute cannot at the same time belong and not belong to the same subject and in the same respect; we must presuppose, to guard against dialectical objections, any further qualifications which might be added. This, then, is the most certain of all principles, since it answers to the definition given above. For it is impossible for any one to believe the same thing to be and not to be, as some think
(Aristotle, ‘Metaphysics’, IV, 3, 1005 b 19
http://etext.library.adelaide.edu.au/a/a8m/ )
Is one not violating the PNC
by saying, like Dubai’s ruler this week in China, that one will stick with the tumbling US dollar (1),
despite, on the one hand, record inflation due to this tumbling,
and despite, on the other hand, the fact that one is seriously considering currency reform and that one thinks it’s right that they do? (2)
Ivo
NOTES
(1)
01 April 2008
Sheikh Mohammed said that UAE is sticking with dollar
peg
http://www.uaechronicle.com/2008/04/sheikh-mohammed-said-that-uae-is.html
The UAE will maintain the dirham’s peg to the tumbling
US dollar despite record inflation, Dubai’s ruler told
ArabianBusiness.com on Tuesday.
+
When questioned about his views on the, he said: “What
you are trying to ask me is if I am going to stick
with the dollar. Why are you running around the bush
asking different questions?… Of course, I will stick
with the dollar.”
(2)
UAE studies dlr peg as Gulf grapples with inflation
Reuters
Tuesday April 1 2008
http://www.guardian.co.uk/feedarticle?id=7428041
By Andrew Marshall and Stanley Carvalho
SNIPS
BEIJING/ABU DHABI, April 1 (Reuters) - The United Arab
Emirates said on Tuesday it was studying its peg to
the weak U.S. dollar as states across the world’s
biggest oil-exporting region face soaring inflation.
+
“They are seriously considering currency reform and
it’s right that they do,” said Simon Williams,
regional economist at HSBC in Dubai
Gulf inflation plans are ‘doomed to fail’
Published: Wednesday, 2 April, 2008, 07:39 AM Doha Time
http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=210662&version=1&template_id=48&parent_id=28
SNIP
DUBAI: Gulf states’ plans to slow inflation are “doomed to fail” because their currencies are pegged to the dollar, said Gabriel Stein, a director at Lombard Street Research.
PREVIEW-Gulf cbankers meet on FX union, reform pressures grow
Thu Apr 3, 2008 2:28pm IST
http://in.reuters.com/article/asiaCompanyAndMarkets/idINL0363955820080403?sp=true
SNIP
DUBAI/RIYADH, April 3 (Reuters) - Gulf central bankers will try to keep a monetary union plan on track next week, but their meeting may highlight increasing fissures over currency reform as inflation soars, the dollar sinks and interest rates tumble.
In the seven months since central bank chiefs of the six Gulf Arab states last met, the dollar has plunged almost 14 percent against the euro, the U.S. Federal Reserve has slashed interest rates six times, and inflation in Saudi Arabia has almost doubled.
Gulf states that had agreed to keep their dollar pegs intact until they create a single currency in 2010 are now diverging, with Qatar and the United Arab Emirates rethinking their pegs as Saudi Arabia, the largest Arab economy, stresses it has no reform plans.
“It has definitely become much more difficult to maintain the status quo over the past seven months,” said Caroline Grady, regional economist at Deutsche Bank.
“Inflation is probably the biggest macro-risk in the Gulf. A lot of the discussion will focus on inflation because it is the most important issue and a common currency is so far off.”
We need Freegold, a freely floating price of gold, as an alternative to the dollar regime.
Freegold makes gold the natural vehicle to temporarily or eternally store one’s wealth in, in order to be able to later convert it into tangible wealth.
Freegold in the central banks’ strong-rooms has the same role to fulfill as the Mona Lisa in the Louvre-museum in Paris.
A wealth reserve which would now be in the strong room (the Louvre) of a monetary union.
C&N,
you said:
Ivo - I get your point, but historically EVERYTHING is priced to the US Dollar. There is no significance to the currency or the country. I could price Oil to wheat or Euro, and still receive the same amount as a US Dollar-denominated barrel. Today, we price Oil to Dollars, if we priced it in Euro’s there would be no effect on the rise, fall, stability, or volatility of the commodity. One more thing, the revaluation of the Gulf currencies is separate from OPEC. Kuwait is an OPEC country that revalued even though its a member of the GCC.
At a March 30 Energy Conference in Dubai,
Ali al-Yabhouni, the OPEC governor of the United Arab Emirates,
said:
“One reason the price [of oil] is high is the weakness of the dollar”
(OPEC member: Weak dollar triggered high prices
Tuesday, April 1, 2008
http://www.worldtribune.com/worldtribune/WTARC/2008/me_oil0011_04_01.asp )
Prophet Muhammad (sallalahu ‘alaihi wa sallam) gave to the world an economic order that was free from economic injustice and oppression. No one worked for slave wages. Wealth did not circulate only amongst the wealthy but, rather, throughout the economy. The rich were not permanently rich and the poor were not permanently poor. There was, therefore, no need for any minimum wage legislation. The market was a free and fair market. No one could ‘reap’ without ‘planting’. Money had intrinsic value
(Ivo repeats: Money had intrinsic value)
and so it could not be manipulated by banks and by a predatory elite to reduce its value. In consequence, such a market and economy never experienced ‘inflation’ No prices were fixed, including the price of labor. Social welfare was achieved in the form of a compulsory tax on wealth that was used to provide for those who did not possess the basic necessities of life. But the value system of the society ensured that the effort would always be made, by those who were capable of such effort, to extricate themselves from having to live of that charity.
(Sheikh Imran N. Hosein, “Jerusalem in the Qur’an – An Islamic View of the Destiny of Jerusalem, Including a Muslim Response to the Attack on America”, Long Island, New York: Masjid Dar al-Qur’an, 2002, p. 213)
Ivo - here are basic fundamentals of the forex markets:
Oil is priced in US Dollar (USD), if the price of oil increases I will need more USD to buy barrels (USD has less value thus i will need more to purchase)… When the price of USD decreases, the Euro increases (& visaversa)… When the EUR increases against the USD (USD=decreases) you buy the oil at the same rate in any currency with no forex risk. Here is an example:
Assuming the only changing variable is the price of the currency, (this is whats happening today).
Day 1
The price of oil is $100
EUR/USD 2.00
I can buy 1 barrel for $200.
Day 2
Assume the US Dollar value falls 100%…
The price of oil goes to $200 (100% increase)
EUR/USD 1.00 (USD decreases 100%)
I can buy 1 barrel for $200.
___
The statement of the governor (Ali al-Yabhouni, OPEC governor, United Arab Emirates) is correct, the price of oil is higher because the USD is falling! BUT NOTE that the when the USD falls, the other currencies (ie. EUR) climb! If i think of a simpler example i will post it. Sorry if this is confusing…
Why should oil producers give their oil away for a piece of paper which has not value?
Because there are forex markets where they can exchange it for …?
As I said earlier, that piece of paper can moreover lose value between the moment they receive it and the moment they convert it to tangible wealth.
If you want to delete my post before the post which starts with “Here’s my paper …”,
please feel free to do so
and please accept my sincere apologies for having posted it.
We need Freegold, a freely floating price of gold, as an alternative to the dollar regime.
Freegold makes gold the natural vehicle to temporarily or eternally store one’s wealth in, in order to be able to later convert it into tangible wealth.
Freegold in the central banks’ strong-rooms has the same role to fulfill as the Mona Lisa in the Louvre-museum in Paris.
A wealth reserve which would now be in the strong room (the Louvre) of a MONETARY UNION.
“All paper will burn!”, said Another.
http://www.usagold.com/goldtrail/archives/another1.html
Ivo Cerckel
Chertkow, Once a Dollar Bull, Sees Long-Term Decline (Update3)
By Agnes Lovasz
http://www.bloomberg.com/apps/news?pid=20601213&sid=aFt5bbbtmXQM&refer=home
SNIPS
April 4 (Bloomberg) — The dollar will fall in coming years as the U.S. seeks a weak currency to boost exports and cut its trade and current-account deficits, said Paul Chertkow, the former head of currency strategy at Bank of Tokyo-Mitsubishi UFJ Ltd.
The U.S. currency will drop to between 80 and 85 yen this quarter, the lowest level since 1995, Chertkow, who retired this week after a 27-year career in global foreign exchange, said in an interview. It will also fall to $1.65 against the euro and may trade as low as $1.70, he said.
“The dollar will go weaker over time,” said Chertkow, 60, who correctly predicted the U.S. currency’s appreciation in the 1980s, a forecast he said earned him a reputation as a dollar bull. “The Americans like the weakness of the dollar because it improves the competitive position of the U.S., which is one of the few things going for the U.S. economy. The Americans also have to recognize there has to be weakness in domestic demand.”
+
Chertkow is skeptical the U.S. will organize coordinated action to halt the dollar’s depreciation on foreign exchanges. Speculation of a coordinated move by major central banks was fueled when the Dollar Index traded on ICE Futures in New York, which tracks the currency against those of six trading partners, dropped to a record low on March 17.
To repeat;
Why should oil producers give their oil away for a piece of paper which has not value?
Because there are forex markets where they can exchange it for …?
As I said earlier, that piece of paper can moreover lose value between the moment they receive it and the moment they convert it to tangible wealth.