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Originally Posted by OrangeZayteh  Can anyone explain to us what are the economic mechanisms and reasons of the USD depreciation.
and what does it imply that oil prices are quoted in USD. wouldn't the quoted price change anyway to reflect the true value of oil, no matter what the current value of the dollar is?
thank you |
The USD is depreciating because of the state of the US economy and because the Fed has lowered interest rates. The ECB on the other hand has started raising interest rates. This forces investors to sell USD to buy the Euro for example where they can earn a higher return.
Regarding oil, it is priced in USD. This is one reason it has gone up so much in USD terms. If you look at it in other currencies, it hasn't gone up as much. Same with gold and other commodities. That's because most commodities are priced in USD.