The effect of the changing US dollar exchange rate
JULIAN LEE | FEBRUARY 2010 | SOURCE: Annual Review 2010
Although all consumers saw oil prices rising over the course of 2009, the weakening of the US Dollar against most major currencies from its position at the end of 2008 offset to a degree the increase in dollar-enominated oil prices.
Although the value of the Dollar rose sharply against the Euro in the second half of 2008, it fell back again in 2009 sparing buyers paying for their oil in Euros from the full effect of the rise in dollar-denominated oil prices.
The weakening of the US Dollar against Sterling in 2Q09 meant that buyers in the UK, too, saw some benefit during the second half of the year (see Figure 21). Taking the Dec-08 exchange rates as a baseline, buyers paying in both Euros and Sterling saw their effective year-end prices some 15% lower than those paying in dollars.
It was not only customers using European currencies who benefitted from the weakening of the US Dollar in this way. The currency also fell against most Asian currencies over the course of 2009.
Among Asian currencies, the US Dollar weakened significantly against the South Korean Won and to a lesser extent against the Indian Rupee. By December 2009, it had fallen 14% against the Won compared with the average December-2008 exchange rate.
The depreciations against the other Asian currencies were much more modest, though. Over the same period the falls against the Rupee, Yen and Chinese Yuan were 4%, 1.5% and 0.5%, respectively. China continued to resist pressure to revalue its currency in 2009.
For further insight into oil price, take a look at the Annual Review 2010
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