Posted by: sean | December 18, 2006

Petrodollars to petro-euros

Tehran has just announced that Iran will be converting all of its assets, holdings, reserves and accounting from US dollars to euros.

I remember there being talk during the run-up to the war in Iraq that one of the reasons for the invasion of Iraq was to reverse Saddam’s decision to dump the dollar for the Euro. Whether or not Baghdad’s decision to trade in euros, which incidentally made Iraq a lot of money, had anything to do with the invasion is unclear. To be honest, I don’t understand enough about monetary policy to know exactly how OPEC countries’ changing to Euros would affect the US economy, except for a vague sense that the results would be less than positive for America. I would, however, be willing to bet that Iraq now only trades in US dollars.

We’ll see what effect Iran’s decision will have, but if I had to guess, I’d say that it hasn’t helped relations between Washington and Tehran.

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