"USING THE DINAR INSTEAD THE US DOLLAR IN OIL SALES" : SEARCHING CHANGE MONETARY STRATEGIES IN IRAQ AND THE MIDDLE EAST BY DINAR REVALUATION, 20 AUGUST

Government Advisor Discusses Using Dinar Instead of Dollar for Oil Sales

On August 20, 2024, a government advisor has explained the possibility of using the dinar instead of the US dollar in oil sales. 2 The discussion comes within the context of regional monetary policies and the broader implications of global economic shifts.

Regional Monetary Policies

In the Middle East, many countries have traditionally pegged their currencies to the US dollar, including Jordan, which has been doing so since 1995.  3 The decision to peg the Jordanian dinar to the dollar was made in response to political volatility and economic challenges in the region. However, the feasibility of this strategy has been debated, especially considering the impact of a falling dollar on import values and export performance.  3

Global Economic Shifts

Recent economic data from the US has revealed moderating inflation and strong retail spending, shifting the market sentiment from recession concerns to renewed confidence in economic growth. 1 This shift has bolstered expectations for Federal Reserve interest rate cuts, with traders anticipating that the Fed will lower borrowing costs from a 23-year high next month. 1 As central bankers prepare to meet this week, the potential for rate cuts has led to discussions about the implications for currencies pegged to the dollar. 1

Oil Market Dynamics

Despite recent online claims, there is no credible evidence that Saudi Arabia intends to stop using the US dollar for oil sales. 4 Experts have noted that the US dollar remains the preferred currency for oil trading due to its global use and stability. 4

Iraq's Dinar Performance

In Iraq, despite government measures, the dinar has continued to fall against the US dollar. 6 This highlights the complex dynamics at play in the regional currency markets and the challenges of maintaining currency value amidst global economic uncertainties.

Conclusion

The discussion around using the dinar instead of the dollar in oil sales reflects broader debates on regional monetary policies and the impacts of global economic shifts. 

While the US dollar remains dominant in oil trading, the potential implications of changing monetary strategies in the Middle East continue to be a topic of significant interest and analysis.