Mahathir proposes euro in oil trade
Mahathir proposes euro in oil trade
Eileen Ng, Agence France-Presse, Kuala Lumpur
Malaysian Prime Minister Mahathir Mohamad on Monday proposed a
currency basket of the euro and the U.S. dollar for oil trades to
hedge against a weak greenback and manipulation by currency
traders.
The veteran Southeast Asian leader said producing countries
were feeling the impact of the weak greenback, which has fallen
sharply against the euro.
"It is time that the quotation of oil prices in dollars be
reviewed," he said in a speech read by his deputy Abdullah Ahmad
Badawi at the opening of a two-day Asia oil and gas conference.
"Perhaps it would be better if payments for the sale of oil by
producer countries are made with the euro equivalent of the U.S.
dollar. Then the appreciation of the euro would benefit the
producers."
But he added: "Should the euro depreciate against the U.S.
dollar, then payment would be made in U.S. dollars. This is a
kind of hedging."
The proposal to dump the world's reserve currency is already
being mulled by Indonesia's state oil company, Pertamina, which
has said it may adopt the euro in its trades because the dollar
has become too volatile.
Abdullah, who will succeed Mahathir after he steps down in
October after 22 years in power, told reporters later that
details of the hedging mechanism were being worked out.
He dismissed suggestions that such a move would upset the
U.S., which is Malaysia's key trading partner, because it would
not "totally do away with the U.S. dollar."
Experts said a euro-dollar basket could help moderate currency
fluctuations but it would take a long time to implement.
Thierry Desmarest, chairman and chief executive of French oil
company Total, said such a move would depend on the Organization
of Petroleum Exporting Countries (OPEC).
"It is a complex one and it is up to the OPEC countries to
decide ... they have looked into it several times and their
conclusion at the end of the day was that the dollar was not that
bad," he told AFP.