how is the tension in the middle east contributing to higher value of Euros, sterling, CAD..etc ?
Question Details: does the fear of short oil supplies have any influence on the exchange rate ?
2007-10-31 00:29:54 · 3 answers · asked by mfk_returns 2 in Social Science ➔ Economics
Oil is not the major problem causing the decline of the dollar, but the increase in the price of oil may have push our trade deficit over the tipping point so it is now considered unsustainable by investors/speculators. The tensions in the middle east increases the risk premium and therefore the price of oil.
2007-10-31 05:36:35 · answer #1 · answered by meg 7 · 0⤊ 0⤋
We see the problem in the middle east like a possibility of restraint in the supply of oil. A restraint in supply of oil signify an elevation of price of oil. The specialists does have not established formally a link between oil price and exchange value because there is many "depends" but i can see that the global inflation that this could produce will reduce the value of all the coins in an environment of desperation and doubt. Maybe the speculators can artificially elevate the price of one coin for a few days but is not possible to predict the relative value of the coins because all of them are getting down at the same time.
2007-10-31 08:04:19 · answer #2 · answered by CSI - Economics 4 · 0⤊ 0⤋
The decline of the dollar is caused by inflation. The USA is printing an enormous amount of money to pay for wars.
The more money there is , the less valuable it becomes
2007-10-31 08:16:20 · answer #3 · answered by Kira 7 · 0⤊ 1⤋