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For your attention
by threehegemons
21 August 2002 16:35 UTC
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Steven Sherman spotted this on the Guardian Unlimited site and thought you 
should see it.

Note from Steven Sherman:

Iran is threatening to switch oil transactions in the Euro--which could be a 
real mess for the US, as this is what much of the value of the dollar rests on.

To see this story with its related links on the Guardian Unlimited site, go to 

Dollar falls as Saudi investors 'withdraw billions'
Mark Tran
Wednesday August 21 2002
The Guardian

The dollar today fell from recent highs against the euro and yen following a 
report that Saudi investors were pulling billions of dollars out of the US.

According to the Financial Times, disgruntled Saudis have withdrawn as much as 
$200bn (£131bn) as relations between the US and Saudi Arabia come under 
increasing strain. 

In the most recent irritant in already strained ties between the two countries, 
an analyst from the Rand corporation thinktank told the Pentagon that Saudi 
Arabia was the "kernel of evil". The fact that 11 of the 15 perpetrators of the 
September 11 attacks were Saudis had already sullied Saudi Arabia's image in 
the eyes of Americans.

An analyst cited by the Financial Times said Saudi investors have been 
deserting the US in recent months. Youssef Ibrahim of the Council on Foreign 
Relations, an American thinktank, said the move followed hawkish US 
commentators' calls for the freezing of Saudi assets.

But financial analysts reacted sceptically to the report. State Street Bank, an 
American bank, said there had been no significant shift out of dollar assets by 
foreigners recently.

"Foreigners bought $350bn in dollar assets since September 2001, 10% below the 
previous nine months," said an analyst. "This suggests that foreign appetite 
for dollar assets has not dramatically changed."

But there has been a shift out of dollar assets by American investors amid 
concern over the huge US trade deficit - $37.1bn in June - and over the 
weakness of the American recovery. Worries over the US economy have pushed down 
the dollar since the beginning of the year, although the greenback has been 
gaining in recent weeks.

Despite scepticism over a big Saudi shift out of dollar assets, Iran - 
described as part of an "axis of evil" by President George Bush, is reportedly 
considering switching crude oil sales from dollars into euros. 

A committee of experts is said to be pondering the move, with Iran's central 
bank yet to issue a final decision on whether to drop the dollar. Iran has 
earned at least $10bn so far this year from crude exports, with oil revenues 
providing 80% of its foreign income. 

In morning trading, the dollar was down 0.3% against the euro at $0.98 and more 
than 0.5% down against the yen at 118.10 yen, but off its worst levels of the 

Copyright Guardian Newspapers Limited

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