Page last updated at 13:53 GMT, Tuesday, 6 October 2009 14:53 UK

Dollar falls on oil plan report

Dollar notes

The dollar has fallen following a report that Gulf states are in secret talks to replace the greenback as the main currency for the trading of oil.

Nations including Saudi Arabia and the United Arab Emirates were speaking to Russia, China, Japan and France, said the UK's Independent newspaper.

However, Saudi Arabia subsequently said the report was "absolutely inaccurate".

It caused the euro to rise 0.4% against the dollar to $1.47040. The pound also rose, by 0.4%, before falling back.

The pound reached $1.5991 before dropping back to $1.58920.

Euro verses dollar

The fall in the value of the dollar had a knock-on impact on the price of gold, which rose to a record high of $1,036.60 an ounce.

Gold rose because a weaker dollar - in which it is valued - increases its attractiveness to investors.

The Independent's report said the Gulf states wished to replace the dollar over a nine-year period with a basket of currencies including the yen, China's yuan, the euro, and the new unified currency planned for nations in the Gulf Co-operation Council, which include Saudi Arabia, Kuwait, the United Arab Emirates and Qatar.

Kuwait also denied the article's claim.

"We have never discussed or proposed this," said Kuwaiti Oil Minister Sheikh Ahmad Abdullah al-Sabah.

China's central bank suggested in March that the dollar should be replaced by a new global reserve currency run by the International Monetary Fund.

Pound verses the dollar

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