ECONOMIC INTELLIGENCE WEEKLY (ANNEX)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001500160004-1
• Release Decision: RIPPUB
• Original Classification: T
• Document Page Count: 5
• Document Creation Date: December 15, 2016
• Document Release Date: February 17, 2004
• Sequence Number: 4
• Publication Date: October 18, 1973
• Content Type: REPORT

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Approved For Release 2004/03/17 : CIA-RDP85T00875 00150 Top Secret
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Economic Intelligence Weekly
(ANNEX)
Top Secret
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Copy No. 12 4
Approved For Release 2004/03/17 : CIA-RDP85T00875R001500160004-1
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Rumors are circulating in Europe that the Arab oil states are switching
out of dollars to minimize the effect of any asset freeze imposed in
retaliation to an Arab oil embargo. No evidence is available, however, of
any substantial dollar sales so far. The dollar has weakened only slightly
on international money markets.
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The Arab oil states have enough liquid foreign reserves to disrupt
currency markets. They have customarily maintained most of their reserves
in liquid form - cash, time, and demand deposits, and short-maturity bills
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and certificates of deposit.
It is questionable whether the Arabs would want to dump large dollar
holdings. The exchange controls surrounding the strongest European
currencies - including the Swiss franc - minimize earnings on
foreign-owned deposits and thus make transfers into these currencies
expensive. Sterling, the major currency least encumbered by controls, has
proved to be unstable
The Arab states probably are not particularly worried about a US freeze
on their holdings. Only about half of their foreign exchange reserves are
held in dollars, and only a very small proportion of these dollars are
deposited in the United States. Most of the dollars are held in Western
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