Effects of Exchange Rates on Crude Oil Trade Between China and the United States

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Table of Contents Introduction.................................................................................................................................... 2 Factors Affecting Changes in US dollar Exchange Rate..................................................................... 2 Economic Performance............................................................................................................... 2 The Outlook for Inflation............................................................................................................. 3 Interest Rates Differences........................................................................................................... 5 Current Account Deficit............................................................................................................... 5 Terms of Trade............................................................................................................................ 6 Public Debt................................................................................................................................. 6 The Effects of Exchange Rates on Crude Oil Trade Between China and the United States......... 8 Conclusion..................................................................................................................................... 16 Works Cited................................................................................................................................... 17
To what extent the changes in the US dollar exchange rate will affect the crude oil between China and the United States?
Introduction
The US dollar is the steadiest currency globally. Other currencies get their values through the exchange of the dollar. For a long time, the value of the global currency has steadily gained worth. When the dollar's value is stable, other currencies and economies are also steady. The world economy mainly depends on the stability of the US dollar to determine how the prices of critical items are determined. One such product that relies on the dollar's stability is crude oil, whose change in the price extensively affects the cost of other products. This change implies that the cost of importing oil increases, resulting in a rise in gas prices. The dollar's value is mainly determined by three main factors; exchange rates, treasury earnings, and foreign currency assets. When the three determinants are stable, the dollar's worth remains stable. It's worth noting that China has experienced tremendous economic growth in the past two decades. As part of the global economy, crude oil is an essential commodity for the Asian country. Thus, understanding the US dollar exchange rate changes is vital in comprehending its effects on the crude oil trade between China and the United States.
Factors Affecting Changes in US dollar Exchange Rate
Economic Performance
The economic growth rate indirectly affects the exchange rate of the US dollar. No direct links result in a change without considering other variables to precisely determine the exchange rate. A strong exchange rate is an indication of a strong economy. The stability of the US economy has ...