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11:04 Report: Gulf States in Secret Talks to Drop Dollar

The world's oil producers, as well as China, Japan and France, are in secret talks to end the use of the U.S. dollar to buy and sell crude oil, a British newspaper reported on Tuesday, sending the American currency lower in overseas trading. "Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars," said the report in The Independent, which cited unidentified sources in the Gulf and Hong Kong. It added that France had also been involved in the talks. The report, written by leading journalist Robert Fisk, said Gulf states plan to transition the trading of crude oil over nine years from the U.S. dollar to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Cooperation Council, including Saudi Arabia, the United Arab Emirates, Kuwait and Qatar. The report did not make clear how the change would work and raised doubts among some analysts that such a switch could occur anytime soon, despite speculation about the dominant role of the U.S. dollar in global trade and as the world's main reserve currency. var adsonar_placementId="1425871",adsonar_pid="1367767",adsonar_ps="-1",adsonar_zw=224;adsonar_zh=93,adsonar_jv="ads.adsonar.com"; qas_writeAd(); U.S. officials, which are "sure to fight this international cabal," are aware the secret meetings have taken place but have not fully discovered all of the details, the newspaper said. The report cited an unnamed Chinese banker as saying the plan "will change the face of international financial transactions. America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate." The issue of shifting oil trade away from the U.S. dollar has been raised occasionally in recent years. Iran began trading most of its crude oil exports in non-dollar currencies a few years ago. In wake of the report, the U.S. dollar fell against six major currencies on Tuesday. "There are worries that Middle Eastern countries may stop using the dollar in oil transactions," Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA, told Bloomberg. "This is causing the dollar to be sold across the board." Reuters said sources at refiners in Japan, China and South Korea reported they had not been approached by any oil suppliers about changing the terms of their oil purchases.

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