The dollar is losing market share in oil transactions, according to JP Morgan

According to researchers, a fifth of worldwide supplies were sold and acquired in foreign currencies.

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The Wall Street Journal stated this week that global crude consumers and exporters are currently coping without dollar-denominated trade accords, citing Natasha Kaneva, JPMorgan Chase’s director of global commodities strategy.

The claim comes a day after Iran and Russia, two of the world’s largest oil exporters, announced an agreement to trade in their own national currencies rather than the US dollar. Furthermore, the sanctioned countries have found clients for their exports in China and India, where they are being sold at a substantial discount.

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“The US dollar is facing some competition in commodity markets,” Kaneva told the journal, adding that the proportion of global oil traded in other currencies has risen to about 20%.

When it comes to other commodity-selling giants, the tendency is less clear. However, several of countries, notably Brazil, the UAE, and Saudi Arabia, have made measures to lay the basis for commerce that does not use the US dollar.

According to JPMorgan statistics, twelve large commodities contracts were executed in non-dollar currencies in 2023, compared to just seven previous year and only two from 2015 to 2021.

The data pertains to physical commodities transactions rather than financial market futures trading. Sellers in Russia apparently resolved non-dollar contracts this year, with only one instance lodged in the UAE.

India and the UAE reached a pact on local currency trade earlier this year. The first consignment of Emirati oil was purchased in rupees by an Indian refiner. Brazil and China have recently completed their first commodities transaction in local currency for a cargo of Brazilian pulp.

China and Saudi Arabia struck a 50 billion yuan ($7 billion) local currency exchange deal last month to boost financial connections and promote the usage of local currencies between the two countries.

The dollar’s proportion of all trading in foreign exchange markets is estimated approximately 88%, making the US currency largely dominant in global commerce and finance.


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