THE WhatsApp message from Hj Kamil amused us but, at the same time, it annoyed Hj Zainal. It read: "Usual place after T20+W3, be there. Petrodollar." I was confused about the T20+W3 and petrodollar part.
Hj Zainal curled his lip when he saw Hj Kamil at our usual haunt at Section 3, Shah Alam.
"Write in full sentence, lah! I had to ask my grandson what T20+W3 meant."
It turned out to be tarawih 20 rakaat and Witir 3 rakaat.
"The Isyak prayers were about to start, so I didn't have time to write a long-winded message to old geezers like you.
"And it should pique your interest to read up about petrodollar, but you did not read, did you?" Hj Kamil asked.
We shook our head.
To begin this long-winded conversation between four 60-year-old senior citizens after tarawih, Hj Kamil said petrodollar became a "special currency" following an agreement between Saudi Arabia's King Faisal and the United States' president (Richard) Nixon in 1974.
Saudi Arabia's subsequent move, on the US' request, was to convince the Organisation of the Petroleum Exporting Countries members to sell oil in US dollars.
America then channelled the proceeds into US banks or the Federal Reserve — a situation that favoured the country.
The arrangement saw an increase in demand for US dollars because any country that wished to buy oil must first buy the greenback.
In return, the Saudi currency was set at a rate of 3.75 riyal per US dollar, which eventually kept the Saudi economy afloat as the conversion rate has remained the same all these years.
"We all know that. It has kept the US dollar strong. So what has it got to do with us in the current situation?" asked Hj Zainal.
"Wait. Let me finish," replied Hj Kamil as he dipped toasted bread into a cup of thick Kopi O.
He then explained that Malaysia could be in trouble if the US currency was challenged by the BRIC (Brazil, Russia, India and China) when they decide to buy oil in their own currencies.
"We'll become like the pelanduk (mousedeer) that becomes the victim when two elephants clash. Our ringgit is hedged against the greenback, that's why."
Hj Zainal interjected: "Oh, I read a report that the West's sanctions on Russia may backfire. The sanctions may threaten to erode the dominance of the US dollar."
In fact, an International Monetary Fund report speculated the invasion of Ukraine could cause more "fragmentation" in the global financial system.
Dr Latiff echoed the sentiment that the sweeping measures by Western countries, including restrictions on Russia's central bank, could encourage the emergence of small currency blocs based on trade between separate groups of countries.
For instance, India is reviewing its trading policy with Russia so that it could be carried out more in rupees and rubles.
Russia has sought for years to reduce its dependence on the dollar, a campaign that accelerated in earnest after the US imposed sanctions in retaliation for its annexation of Crimea in 2014.
China and Russia have agreed to buy and sell oil in yuan and ruble, as well as for other sectors like electrical and agricultural industries.
Pakistan's ousted prime minister, Imran Khan, successfully negotiated a Pakistani rupee-Chinese yuan deal in 2019. The deal covered semiconductors, transformers and broadcasting equipment.
Although the US disagreed with the arrangement, it didn't take any action against Pakistan because oil was not part of the deal.
However, when Imran tried to broker a Pakistani rupee-Russian ruble deal for oil this year, the US objected as it might weaken the US dollar and economy.
"Libya and Iraq had refused to acknowledge the petrodollar marshalling. Now look at Libya and Iraq, which are ravaged by war and mired in unending conflicts," Dr Latiff said to conclude our discussion.
Malaysia needs to stay afloat amid the uncertainties, with prices of oil continuing to skyrocket. A marked rise in oil prices contributes to higher inflation levels, which lead to higher prices of other goods — a cost-push inflation that we cannot afford to bear for too long.
