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6 Oct, 2009 16:53

“No single currency will replace the dollar”

A switch from using the dollar as a world currency could hurt countries whose assets are mostly in dollars, says Ronald Smith, head of research at Alfa-Bank

The UK’s Independent newspaper reported Tuesday that Middle-East countries joined by Russia, Japan, China and France are holding secret meetings to end oil trading using the dollar.

“I don’t think you’ll see holders of the dollar willing to see the Euro completely substitute the dollar. I don’t think they want to put all their eggs in one basket so to speak,” Smith said.

The newspaper adds that within just nine years crude could be priced in units based on a basket of currencies including the Japanese Yen, Chinese Yuan, the Euro, Gold and possibly the Russian Ruble.

However, Smith doesn’t see this completely coming to fruition

“I don’t think oil will actually stop being priced in dollars. Everyone is so used to seeing the price of oil in dollars. Even if the transaction is in another currency it will still be indicated in dollars,” he added.

Moscow has repeatedly called for a wider use of regional currencies to cut dependency on the US dollar, saying it was a key contributing factor in causing the current global economic crisis.