Since the strong dollar has coincided with a 40 per cent fall in Brent crude from its June 20 peak, higher interest rates during a time of $300bn in lost petrocurrency
revenues is a double whammy deflation shock for regional asset markets -- equity, debt and property.
The problem in 1983 was that the pound had became a petrocurrency
, far too high against the dollar and deutschmark for British industry to compete.
The outcome: Firstly, the US would certainly not sit and watch the dollar losing its petrocurrency
status and would do whatever needs to be done to defend the greenback; secondly, China wouldn't allow it as it wants the yuan to be a petrocurrency
as well; thirdly, in the moment oil and gas gets priced in bitcoins, it would be exposed to the cryptocurrency's extreme volatility with massive consequences and fiscal uncertainties for petroleum-exporting countries.
So the Russian equity index fund (symbol RSX) will outperform its emerging markets peers since the rodina, above all, is the ultimate petrocurrency
The Davos consensus will only survive in the fabulously wealthy petrocurrency
enclaves of the Gulf, such as UAE and Qatar, where ruling elites can afford the luxury of pro-market capitalism.
The UAE has now emerged as the most politically stable, global economy integrated state in the Arab world, anchored by Abu Dhabi's petrocurrency
wealth and Dubai's trading entrepot ethous, a $350 billion GDP economy that call well grow at five per cent.