Lowering Oil Prices Increase Pressure on Commodity Related Currencies
By Daisy Joseph
The price of oil in the market affects numerous currencies all over the world. Several global economies are dependent on oil prices and hence, such commodity-related currencies face extreme pressure in recent times. Norwegian Crown and Canadian dollar faced losses on Wednesday. Sterling also faced a decline as it approached a two-month low.
On Wednesday trading, the oil prices continued to follow the downward trend. The price has reached a multi-month low, canceling all the efforts taken by OPEC to cut oil production. OPEC has also requested non-OPEC members to comply with reduced output to deal with the high supply in the market. Investors were not happy with the current situation as the inventory data still proves to be a disaster for oil prices.
The Norwegian Crown reached a five-month low against the dollar, losing almost 0.5% in a single day. Crown was trading at 8.5564 against the dollar. The Canadian dollar also lost almost 0.4% on Tuesday. The currency was trading at C$1.3296 per dollar, losing more than 0.2% on a single day.
Just a week ago, Canadian dollar reached C$1.3165 against the dollar following the support extended by the Bank of Canada. As the policymakers showed interest in increasing the interest rates, it helped the currency to gain in the market.
The Australian dollar also lost 0.3% reaching $0.7550 and New Zealand dollar also lost 0.2% trading at $0.7228. Not surprisingly, Yen gained in the market as it reached 111.120 against the dollar. When the major currencies decline investors turn towards Yen as it is considered as a safe haven currency.
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