Forex Trading - new oil currency

Forex Trading - new oil currency - With oil prices reaching new highs seemingly every day a lot of forex market participants have attempted to use this fact as a proxy for currency trading. General consensus is that some national currencies, to some degree correlated to important raw materials and can be used. Most experts, however, would never be able to agree on which currency the best coarse match. Until now.

Number of oil-rich countries are small states around the Persian Gulf. Outside of its crude oil production economies are not large,
in line with small populations. These countries formed a Gulf Cooperation Council, both economic and, to a lesser extent, military organization. Saudi Arabia is the largest member state, Kuwait, Qatar, Bahrain, United Arab Emirates and Oman make the list. Yemen is pending.

Since oil is calculated in U.S. dollars, respective currencies of the Member States are pegged to the dollar. Recent years, this arrangement created some problems for the Senate: high oil prices and the weak dollar caused huge inflation pressure. Central banks still had to price in accordance with FED, U.S. dollars for stakes, promoting lower inflationary threats. Qatars inflation exceeded 13% for example, in 2007. Not a welcome development.

After years of discussion and planning, central bank of the Gulf Cooperation Council,

have a draft charter for a central monetary authority approved. This agreement, the group moved closer to a goal of creating a single currency for the Member States. The introduction of the new currency in 2010 is set, but most experts expect that it will be delayed. The project of this complexity and scope of the work takes almost all the questions always take longer than expected. We all remember €.

For example, Kuwait severed its link dollars last year and began tracking its dinar against a basket of currencies ease inflation, partially offset by higher costs for imports - was forced to help a decision that a major obstacle to the 2010 target date for monetary union to could be achieved. Kuwait has used no currency composition of the basket passed for the new Peg. Each member would also have inflation in particular, continue to advance the Union Cap.

Despite back as wanted, at a recent meeting in Qatar, the governors reaffirmed the goal of monetary union in 2010 as Gulf states additional unilateral decisions on monetary policy to avert that could jeopardize the project. Gulf Cooperation Council member states would "with the implementation of the single currency in time for Push," said an official. Forex Trading - new oil currency

Once the new currency is introduced, it would likely to trade very quickly. Most agents want to use on the initial interest as soon as possible. Costs of trade would be a different story, however, spread with rich and some illiquid periods during the trading day. Nevertheless, it is certain that dealers are excited about this yet unnamed currency.

Gulf Cooperation Council members believe that the new monetary union will help curb inflation. Among many other advantages mentioned are increased economic cooperation in the region, in money and goods flow freely. Single currency should also Persian Gulf countries in a better position in the increasingly border less world economy place. And perhaps help them on the next big step - ready life after oil.