Oil Price Fluctuations and U.S. Dollar Exchange Rates

Date

2010

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Abstract

Adding oil prices to the monetary model of exchange rates, we find that oil prices significantly explain movements in the value of the U.S. dollar (USD) against major currencies from the 1970s to 2008. Our long-run and forecasting results are remarkably consistent with an oil-exchange rate relationship. Increases in real oil prices lead to a significant depreciation of the USD against net oil exporter currencies, such as Canada, Mexico, and Russia. On the other hand, the currencies of oil importers, such as Japan, depreciate relative to the USD when the real oil price goes up.

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Citation

Lizardo, R. A., & Mollick, A. V. (2010). Oil price fluctuations and U.S. dollar exchange rates. Energy Economics, 32(2), 399-408. https://doi.org/10.1016/j.eneco.2009.10.005

URI

https://doi.org/10.1016/j.eneco.2009.10.005
 http://hdl.handle.net/20.500.12521/258

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Peer-reviewed Journal Articles