Dec 2005 Financial News

Dollar’s rise aided by Opec holdings

Dec 06, 2005

Middle Eastern oil exporters have rediscovered their love of the US dollar in the past year, helping fuel the currency’s rally to two-year highs against the euro, yen and sterling.

The position marks a sharp turnaround from the third quarter of 2004, when the proportion of bank deposits held in dollars by members of the Organisation of the Petroleum Exporting Countries slumped to a record low.

By the middle of this year, the proportion of Opec deposits held in dollars had rebounded from 61.5 per cent to 69.5 per cent, with the share held in euros falling from a high of 24 per cent to 16 per cent, according to figures released on Monday by the Bank for International Settlements.

The data will reinforce the view that the dollar’s surprise strength this year has been partly caused by Opec’s recycling of petrodollars. The currency has risen 13.5 per cent to $1.17 against the euro when most commentators had forecast a fourth straight year of losses.

Oil exporters have become financial kingmakers as real oil prices have leapt 170 per cent in real terms since 2001 to 25-year highs.

The Trinidad Guardian
Tuesday, 6th November, 2005
http://www.guardian.co.tt/business3.html