I want to know if there is any relationship between currency power and oil prices, what factors affect of oil prices, can someone suggest me some papers on this issue.
In my opinion oil prices depend on technologies employed (e.g. shale oil), global demand of oil-based products and supplier behavior.
Dear Norman Lubello
Thank you very much for your comment my friend .
Best Regards,
Dear Dr. Faris,
Most commodities in the international markets are pegged to the US dollar. There is an inverse relation between the prices of commodities such as oil and the USD.
Please check the dollar index, it is currently about 99, which is a record high. This is due in large part to the fall in commodity prices, which leads international investors to safe havens such as government bonds .
As for other currencies, it will depend on the economic situation in the respective country. For example , China has recently devalued the Yuan by more than 4 % to offset rise in prices of exports.
Dear Dr. Shouvik Sanyal ·
Greetings,
Many thanks my friend for your comment , it is very helpful for me .
Best Regards
Dear Dr. Mansour Naser Alraja
Greetings,
Thank you very much for your contribution , it is very useful for me
Best Regards
In general, there should be no link between oil price and currency power. When markets were with real goods only (maybe a century ago, but even 20 years ago there was much less paper oil), price was an equilibrium between demand and supply, while exchange rates are influenced by macroeconomic processes (like state debt, inflation, etc).
Nowadays we have two extra processes to be taken into account.
1) There is quite substantial trade in paper oil, exceeding by order the real volume, and this trade is nominated in dollars. - This leads to many speculative processes, and in the end to correlation between oil price and dollar exchange rate.
2) Budget of some countries depends very heavily on oil export, and falling price leads to the problem with budget balance, and in some cases this causes currency devaluation (like it happened in Russia).
Dear Yuri Yegorov
Greetings,
Thank you very much for your comment. It is very useful for me
Best Regards
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