Monday, June 17, 2024

Petrocurrency

A Petrocurrency is the currency of an oil-producing country whose oil exports constitute a large enough proportion of total exports that the value of the currency falls as the price of oil increases.

In other words, when the oil price rises, the oil currency appreciates, and when the oil price falls, the oil currency depreciates.

With such a large share of exports, the rise and fall of the currency will be correlated with the price of oil.

If the share of oil and gas exports increases further, the link between oil prices and exchange rates may become stronger.

Oil-producing countries that rely heavily on oil export revenue include Saudi Arabia, Russia, Norway, Canada and Mexico.

While the United States has recently moved into the top five exporters of crude oil, it is not yet considered a petro-currency.

Top Crude Oil Exports

If you want to learn more foreign exchange trading knowledge, please click: Trading Education.

Read more

Local News