MercoPress. South Atlantic News Agency

France and Arab countries deny ditching the US dollar in oil market

“Speculation, speculation” said French Economy Minister Christine Lagarde

France dismissed on Tuesday as “speculation” a British newspaper report that it was in secret talks with Gulf Arab states, Russia, China and Japan to replace the US dollar with a basket of currencies in trading oil.

Asked about the report in The Independent, French Economy Minister Christine Lagarde told Reuters: “Speculation, speculation. We don't like speculation.”

Pushed further on the issue, Lagarde added: “It is not on the agenda.”

The Independent's Middle East correspondent Robert Fisk cited unidentified sources in Gulf Arab states and Chinese banking sources in Hong Kong for his story.

It said the proposal was for trade in crude oil to move over nine years to a basket of currencies including the Japanese yen, the Chinese Yuan, the Euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, which includes Saudi Arabia and Kuwait.

Big oil producing nations denied the report on Wednesday.

The head of the United Arab Emirates' central bank said the Gulf nation has no plans to stop pricing oil in dollars or tying its currency to the greenback.

UAE Central Bank Governor Sultan Nasser al-Suweidi told The Associated Press in a statement Tuesday that “there has been no meeting ... whatsoever” to discuss ending the US currency's role in the pricing of oil.

Al-Suweidi “denied totally” a report in Britain's Independent newspaper that said secret meetings were taking place between Arab states, China, Russia, Japan and France to instead use a basket of currencies for oil.

Al-Suweidi says “there is no substitute for the dollar because it is the basis of international trade and investments”.

Saudi Arabia’s Central bank governor, Muhammad al-Jasser, in Istanbul for International Monetary Fund meetings, told reporters that there has been “absolutely nothing” of that nature discussed between Saudi Arabia, the world’s biggest oil exporter, and other countries.

Scrambling to protect the dollar's status as an international yardstick, Treasury Secretary Timothy F. Geithner told reporters the US will do “everything necessary” to maintain confidence in its currency.

Also in Istanbul for the IMF session, Geithner said, ”We recognize that the dollar’s important role in the system conveys special burdens and responsibilities on us, and we are going to do everything necessary to make sure we sustain confidence”.