OPEC Nations Seen Cutting Worldwide Deposits in Dollars
LONDON, Dec. 5 - Member nations of the Organization of the Petroleum Exporting Countries have cut the proportion of their deposits denominated in dollars by more than 13 percentage points in the past three years, mainly to the advantage of the euro, the Bank for International Settlements said Sunday.
In its latest quarterly report, the Bank for International Settlements - a forum for world central banks - attributed the trend partly to United States interest rates having fallen below euro-zone levels.
The report said dollar-denominated deposits fell to 61.5 percent of total deposits by members OPEC in the second quarter of 2004, from 75 percent in the third quarter of 2001.
The share of euro-denominated deposits rose to 20 percent from 12 percent over the same period.
The bank, based in Basel, Switzerland, noted that less oil revenues seem to have gone into the international banking system recently but said there had been a "subtle but noticeable" shift in the composition of deposits in the past three years.
"Since the third quarter of 2001, oil revenue seems to have been channeled increasingly into euro and other currency deposits," the bank said. "This shift out of U.S. dollars probably reflected to some extent the relative change in interest rates in the United States and the euro area since 1998."
The bank said United States short-term interest rates were an average 2.1 percentage points higher than their euro counterparts for two years before March 2001, but averaged 1.3 percentage points lower from then to June 2004. In the 2004 second quarter, B.I.S. reporting banks' net liabilities to OPEC members stood at $142 billion.
Oil prices rose 70 percent at one point this year from early January due to fast growth in demand and concerns over supply. The United States crude oil price advanced to $55.67 in October but has since fallen back to around $42.50. Speculation that Middle Eastern central banks and investors had been shifting funds out of the dollar into the euro contributed to the dollar's decline in the past three years. The dollar hit a record low on Thursday, when one euro was worth $1.34.
OPEC nations are Saudi Arabia, Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, United Arab Emirates and Venezuela. The B.I.S. excluded Indonesia from its study because it became a net oil importer this year.
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