Iran is selling more of its oil for payment in euros than dollars as it seeks to shift its foreign currency reserves away from the depreciating currency of its political enemy, the United States.
The world’s fourth-biggest oil exporter has inserted a clause in its oil contracts allowing it to request payment in alternative currencies.
Gholanhossein Nozari, the managing director of National Iranian Oil Company, said that 57 per cent of Iran’s income from oil exports was now received in euros.
The move reflects a political desire for less reliance on the dollar, as well as a need to avoid further depreciation in currency reserves. Iran’s dollar holdings are thought to have fallen from 40 per cent of currency reserves to just a third.
Will this exacerbate the fall of the dollar? If people are to switch from Dollars to Euros it will undermine the markets confidence in financing America’s huge borrowing.
At the moment America’s trade deficit is financed at unusually low interest rate because of people’s confidence in the US dollar, but this could be about to change soon.
Dollar falls to 15 Year Low