Oil price drivers, geopolitical uncertainty and oil exporters’ currencies
- Q. Farooq Akram
- Working Paper
Empirical relationships between crude oil prices and exchange rates of oil exporting countries tend to vary over time. I use econometric models of the norwegian and canadian nominal exchange rates to investigate whether such time-variation could reﬂect shifts in the key oil price drivers over time. Results suggest that demand- and supply-driven oil price increases strengthen these currencies to diﬀerent extents. In contrast, heightened geopolitical uncertainty and associated oil price increases go together with a weakening of oil exporters’ currencies. The latter result may explain coincidences of higher oil prices and a weakening of oil exporters’ currencies.
Norges Bank’s Working Papers present research projects and reports that are generally not in their final form. Other analyses by Norges Bank’s economists are also included in the series. The views and conclusions in these documents are those of the authors.
ISSN 1502-8143 (online)