High dollar for the kingdom double-edged sword is the price of the first lowers the price of a barrel of oil exported by the Kingdom to the outside and thus reduced oil sale revenues.But from the second lowers the price of goods imported by the Kingdom of the countries that fell their currencies relative to the dollar and therefore supposed to prices of imported goods fall from these countries.
To be frank from the outset must warn that the loss of the low price of a barrel of oil oftenmuch larger than the few that offset gains from lower prices of imported goods.
In theory and practical also the rise of the dollar exchange rate (with the stability of other factors) leads to lower demand for oil and thus lower the price of oil only in dollars, and theprice of oil in currencies importing countries Petroleum completely will rise by the highest increase in the dollar exchange rate for their currencies and this will certainly turn toreduced demand for oil in the world market just as the high price of tomatoes on thedecline in demand for tomatoes in the local markets affect.
So clear, then, that the Petroleum Exporting Countries revenues will drop their revenues in two ways: First, the low price of a barrel of dollars and secondly decrease the required amount of its oil.
But do Exporting Countries could Petroleum compensate losses from lower revenues due to the high price of the dollar by increasing its purchases from countries that dropped their currencies? Theoretically yes, but in practice it may be very simple compensation is negligible for the amount of the loss.
To limit the subject and the reader will implement simplified example describes the impact of the high dollar on UK revenues from oil exported to Japan price.
Notes that when Japan buys oil from the kingdom would pay for the Kingdom of dollars(because the oil is sold in dollars) So Japan will buy dollars first. If the dollar for the yenrate is 85.5 yen and the price of a barrel of oil of $ 110.5 it will pay 9447.75 yen per barrel,while if the dollar exchange rate rose to 113.5 yen, Japan will pay 12541.75 yen per barrel, an increase of 3044 yen per barrel, and so according to the law of demand (whichwe all know is not even economists) Japan will decrease demand for oil at the high price of the dollar because it will force the yen, the largest number.
We have seen how the high price of the dollar recently has already led to a decline in the price of a barrel of oil from about $ 110 to about $ 85 This means that the UK will get the $ 85 and not $ 110 a barrel, how this affects the prices of goods imported by the Kingdomof Japan?
Certainly imported from Japan commodity prices will be reduced by the yen lower dollarrate SUV was priced in Japan, 1.5 million yen, for example, was bought by Saudi Arabiaat $ 17.65 thousand dollars (66 200 SR) when the exchange rate of 85 yen, but after the rise in the dollar exchange rate to 113 yen become a buy to 13.27 thousand dollars (49.8thousand riyals) just any will provide 16 400 riyals.
Conclusion theoretically could compensate for lower revenues resulting from lower oil prices due to higher dollar exchange rate, but in practice will be limited compensationdepends on the size of the importing country, which dropped its currency relative to the dollar goods.
To be frank from the outset must warn that the loss of the low price of a barrel of oil oftenmuch larger than the few that offset gains from lower prices of imported goods.
In theory and practical also the rise of the dollar exchange rate (with the stability of other factors) leads to lower demand for oil and thus lower the price of oil only in dollars, and theprice of oil in currencies importing countries Petroleum completely will rise by the highest increase in the dollar exchange rate for their currencies and this will certainly turn toreduced demand for oil in the world market just as the high price of tomatoes on thedecline in demand for tomatoes in the local markets affect.
So clear, then, that the Petroleum Exporting Countries revenues will drop their revenues in two ways: First, the low price of a barrel of dollars and secondly decrease the required amount of its oil.
But do Exporting Countries could Petroleum compensate losses from lower revenues due to the high price of the dollar by increasing its purchases from countries that dropped their currencies? Theoretically yes, but in practice it may be very simple compensation is negligible for the amount of the loss.
To limit the subject and the reader will implement simplified example describes the impact of the high dollar on UK revenues from oil exported to Japan price.
Notes that when Japan buys oil from the kingdom would pay for the Kingdom of dollars(because the oil is sold in dollars) So Japan will buy dollars first. If the dollar for the yenrate is 85.5 yen and the price of a barrel of oil of $ 110.5 it will pay 9447.75 yen per barrel,while if the dollar exchange rate rose to 113.5 yen, Japan will pay 12541.75 yen per barrel, an increase of 3044 yen per barrel, and so according to the law of demand (whichwe all know is not even economists) Japan will decrease demand for oil at the high price of the dollar because it will force the yen, the largest number.
We have seen how the high price of the dollar recently has already led to a decline in the price of a barrel of oil from about $ 110 to about $ 85 This means that the UK will get the $ 85 and not $ 110 a barrel, how this affects the prices of goods imported by the Kingdomof Japan?
Certainly imported from Japan commodity prices will be reduced by the yen lower dollarrate SUV was priced in Japan, 1.5 million yen, for example, was bought by Saudi Arabiaat $ 17.65 thousand dollars (66 200 SR) when the exchange rate of 85 yen, but after the rise in the dollar exchange rate to 113 yen become a buy to 13.27 thousand dollars (49.8thousand riyals) just any will provide 16 400 riyals.
Conclusion theoretically could compensate for lower revenues resulting from lower oil prices due to higher dollar exchange rate, but in practice will be limited compensationdepends on the size of the importing country, which dropped its currency relative to the dollar goods.
