Monday, August 23, 2010

Why does the rise in the dollar lower the price of oil?

What is the relationship between a barrel oil and the dollar?Why does the rise in the dollar lower the price of oil?
Sellers of oil are not concerned about the nominal value of the barrel of oil but rather what it will buy. If the dollar increases in value, then you can lower the price of a barrel of oil and still buy the same goods and services in Europe and Asia. So, in terms of goods and services, planet wide, the price of oil isn't moving so much. In terms of dollars, it is very volatile because the dollar is volatile.

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