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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (47229)	12/13/2005 5:32:15 PM
From: regli	Respond to of 110194

>Oil does not need to be priced in silver for them to decide to hold silver. Oil does not have to be priced in gold for them to hold gold. Oil does not have to be priced in Euros for them to hold euros.< All of this is true. However, there are reasons as to why countries hold foreign reserves and the Asian crisis produced a very good example. It is no fun to sit on your own currency or even the wrong currency if it tanks unexpectedly. Therefore a country holds currencies in reserve that allow it to purchase vital imports, i.e. oil and other commodities at a time of turmoil. If your oil contracts are in Euros then obviously your Euro holdings become much more important and therefore become a bigger part of your reserves.