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Iran demands Japan pay for oil in Yen
Iran asked Japanese refiners to switch to the yen to pay for all crude oil purchases, after Iran's central bank said it is reducing holdings of the US dollar. The yen rose on speculation for an increase in demand for the currency, the result of Japan's annual 1.24 trln yen ($10.1 bln) of oil imports from Iran. Central bankers in Venezuela, Indonesia and the United Arab Emirates have said they will invest less of their reserves in dollar assets because of the weakening currency. "What else can Japan do but to accept the request, once the oil producer sent its wish?'' said Hirofumi Kawachi, an analyst at Mizuho Investors Securities Co. in Tokyo. "The tensions between the US and Iran are escalating, and it is Iran's measure to hedge risk.'' Iran is cutting its US dollar reserves to less than 20% of total foreign currency holdings, and will buy more euros and yen as tensions with the US increase, Central Bank Governor Ebrahim Sheibany said on March 27.
Iran asked the refiners to use the yen exchange rate quoted at the Bank of Tokyo Mitsubishi UFJ on the date oil cargoes are loaded. The use of yen-based letters of credit for oil "has finally been approved'' by the Iranian central bank and the NIOC, according to the letter, titled "New payment mechanism for Iranian Crude Oil Cargoes.'' Japan imported 1.59 mln kiloliters of Iranian crude oil in May, the least since June 2006, according to government data. Only Saudi Arabia and the United Arab Emirates are larger oil suppliers to Japan than Iran. Posted by: lotp 2007-07-15 |
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