From the Baker Institute blog:
Reports of the U.S. dollar's demise may have been greatly exaggerated, but a report by the Independent's Robert Fisk on "secret meetings" to discuss conducting oil trades -- traditionally priced in dollars -- using a basket of currencies has moved the dollar's exchange rate, and contributed to rising oil prices and record-high dollar prices for gold.
Officials in major oil-exporting countries were quick to deny the allegation that they have been considering the possibility of pricing and trading their oil in other currencies, especially the Saudis, who reaffirmed their commitment to support the dollar as the world's primary currency (and America's primary export). However, it must be noted that this is hardly the first episode of "dollar crises'' prompting OPEC countries to debate trading their oil for a basket of currencies (remember 1980?).
In fact, as the Baker Institute's Amy Myers Jaffe and I argue in our forthcoming book Oil, Dollars, Debt, and Crises: The Global Curse of Black Gold, the most recent episode of rising U.S. indebtedness, depreciating dollars, oil price spikes and debt crises, bears a very close family resemblance to its older sibling of three decades ago, with significant and important differences: The rise of globalization since the 1970s, in part enabled through advances in information and financial technologies, but also enabled by the dollar's dominance as global numeraire, have resulted in globalization of the Middle East's resource curse, as we point out in a recent Foreign Policy article.The bottom line is this: The dollar's situation is very precarious, but not hopeless....MORE