Euro-Dollar Basket for Oil Trades Proposed

Malaysian Prime Minister Mahathir Mohamad yesterday proposed a currency basket of the euro and the US 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 US dollar. Then the appreciation of the euro would benefit the producers.” But he added: “Should the euro depreciate against the US dollar, then payment would be made in US 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.