Oil Producers Shunning Dollars Shifting To Euros

[Jcrowley]

Oil producers shun dollar
By Haig Simonian in Zurich and Javier Blas and Carola Hoyos in London
Published: December 10 2006 20:11 | Last updated: December 10 2006 20:11

Oil producing countries have reduced their exposure to the dollar to the lowest level in two years and shifted oil income into euros, yen and sterling, according to new data from the Bank for International Settlements.

The revelation in the latest BIS quarterly review, published on Monday, confirms market speculation about a move out of dollars and could put new pressure on the ailing US currency.

Market liquidity is traditionally low in December, and many traders have locked in profits, potentially reinforcing volatility.

Russia and the members of the Organisation of the Petroleum Exporting Countries, the oil cartel, cut their dollar holdings from 67 per cent in the first quarter to 65 per cent in the second.

http://www.ft.com/cms/s/277471c2-8889-11db-b485-0000779e2340.html