LONDON, March 7, 2012 /PRNewswire/ --
Currencies Direct hails the Dollar as a financial safe haven during times of oil uncertainty
Prices of crude oil have rocketed throughout Europe in the past few weeks, as the region imposes sanctions and moves towards a trade embargo on Iran because of continued development of its nuclear programme, report Currencies Direct. The sanctions are designed to weaken Iran economically, thus forcing its hand in abandoning its nuclear programme, which the West believes is being enriched towards a weaponry capacity. However, although there are signs Iran is struggling internally as a result of the sanctions, global oil prices are being affected more than initially predicted.
Although Iran claims it has not yet stopped exporting oil to Europe, the markets have already been feeling the effects of the sanctions and Iran's countering threat of cutting off its oil supplies to European nations.
In parts of Europe the price of oil jumped by up to $1 a barrel after the first reports surfaced that Iran had already cut off supplies to six European nations including the Netherlands, Italy and France. While Saudi Arabia has upped its exports, according to the global financial markets this apparently isn't enough to counter the loss of oil coming from Iran.
As the price of crude oil soars, investors will look for safer financial havens. According to currency exchange specialists Currencies Direct these can be found in the US Dollar. Alistair Cotton, corporate dealer at Currencies Direct, says that "the Dollar is the global reserve currency and any issues surrounding Iran and the supply of oil will be US Dollar positive because investors seek safe haven assets and the Dollar is the top of the tree".
Currently the Dollars to Pounds exchange rate is $1.58 to £1. The Pound has been losing ground against the dollar over the past 12 months. In May last year one Pound bought you $1.67. However, if you look in the short term the Pound has been strengthening again. But the trend of recent days and weeks has been one of stability.
The US Dollar is the most popular currency for international transactions and it's also one of, if not the most, dominant reserve currencies. However, there is another factor to take into account. The US is the world's biggest net consumer of crude oil and any reduction in oil flowing to the region could reduce the strength of the US Dollar which would give GB Pounds a boost.
About Currencies Direct
is one of Europe's leading non-bank
providers of currency exchange payment services. Since its formation in 1996 Currencies Direct has evolved and positioned from being an innovative service provider of foreign exchange for consumers and high net worth individuals into a dynamic and pioneering 'business to business' fully integrated treasury solution service provider.
Head quartered in the City of London (United Kingdom) with operations in Europe, Africa and Asia, Currencies Direct is part of the Azibo Group, a privately owned investment company.
SOURCE Currencies Direct