07-12-04 Members of the world's crude oil cartel have been cutting back on US dollar-denominated holdings for three years.
The Bank for International Settlements, in its latest quarterly report, notes members of the Organization of Petroleum Exporting Countries have cut the proportion of deposits held in dollars from 75 % in the third quarter of 2001 to 61.5 %. And, in cash terms, OPEC members' stock of dollar-denominated deposits has fallen by 4 % since 2002, the bank said.

The primary -- though by no means sole -- reason for the shift is the dollar's decline against the euro and the Japanese yen. Because crude oil sales are typically denominated in dollars, a falling dollar cuts into OPEC revenues.
But there are other reasons for the shift: Middle East investors are worried Washington will freeze assets in its war on terror, especially since President Bush was re-elected, and OPEC members spend heavily in Europe and Japan where the dollar's purchasing power is weakest.