Refusing Dollar as “World Currency” Inevitable

TREND CAPITAL
Thursday, September 25, 2008

Latest developments in the financial markets of US and see-saws in the exchange rate of dollar have undermined the position of the America currency in world markets. Today, even more countries are thinking about refusing dollar USD as reserve currency. By doing this, they want to secure their markets and promote the role of national currencies.

According to International Monetary Fund, if in 1999 dollar assets accounted for 71% of all currency reserves worldwide, it makes 65% at present. A total of 25% of reserves of central banks and 39% of liquid demands in private sector are preserved in euros. Not only central banks and source companies, but also investment funds give preference to euro in their currency policy. Diversification of currency reserves reduces threat of losses from the change in rate of one of the currencies.

Azerbaijan has turned to diversification of currency reserves between dollar and euro since 2007. As a result, 60% of currency reserves of Azerbaijan are formed in US dollars and 40% in euro and pound sterling. NBA began to support cost of Azerbaijani manat in bi-currency basket against dollar and euro from 11 March. The basket has been formed by 30% in euros and 70% in dollars against previous 20% and 80% accordingly. Introduction of a new percentage enabled to reduce import of inflation, lessen risks of businessmen carrying out operations with Euro zone and secure neutral level of nominal efficient exchange rate of manat against currencies of the key trade partners.

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As to the currency Azerbaijan uses in calculation with its trade partners, there are also certain changes. If in 2004, share of dollar in calculations on import operations of Azerbaijan made up 85%, this figure dropped to 76% at the end of 2007. But the share of euro went up from 7% to 20%. The share of euro also went up from 3.7% to 9.1% in export operations of non-oil sector for the last three years. The percentage of operations carried out in euro went up from 6% in 2005 to 13% in 2006 in the domestic currency market while share of dollar dropped from 89% to 85%.

Despite drop in rate of dollar in the calculations on export-import operations, it still retains its dominant position. Recently, president of Bank of Association of Azerbaijan Eldar Ismayilov said at a meeting with a delegation led by the secretary general of Association of Banks of Turkey Ekrem Keskin that favorable conditions have been created for Azerbaijan and Turkey to carry out trade operations in direct currencies – manat-lira as indirect conversions (manat-dollar, dollar-manat) are accompanied with big losses and lose of time because of the large scope of trade. It is worth mentioning that Azerbaijan maintains trade links with about 140 countries of the world while more than half of the export accounts for Euro zone.

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4 Responses to “Refusing Dollar as “World Currency” Inevitable”

1. rich Says:
   September 25th, 2008 at 9:55 am

   green and white toilet paper !!!!!!!!!!!!!!!!!!!!!!!

   http://www.youtube.com/watch?v=lm_xX1Ur43I

2. poor Says:
   September 25th, 2008 at 5:34 pm

   christ, that is some terrible music. Why would you advertise that? Do you crave abuse?

3. Neil, London Says:
   September 26th, 2008 at 6:27 am

   This could be the “crisis” they’ve been waiting for to implement the Amero.

4. Andrew Milner Says:
   September 27th, 2008 at 4:02 am

   Looks like the US is fresh out of friends. Fair weather and otherwise. You drag the rest of the world into economic meltdown, and suddenly you’re the bad guy … “You guys are such a bunch of candy assed prima donnas. Everything has to be just perfect for you.”