Commodity currency

A currency that belongs to a country whose economy is strongly correlated with the price fluctuations of a certain commodity.

Investopedia Says:
For example, a large portion of the Canadian economy is tied to the price of oil, which causes the price of this commodity to become a major driver in the value of the Canadian dollar. Other countries such as Australia or New Zealand are in a similar position due to their economic dependence on precious metals such as gold. All of these countries sees money flowing in when their respective commodities rise, causing their currencies to appreciate.

Related Links:
Find out which currencies are most affected by fluctuations in gold and oil prices and improve your trading. Commodity Prices And Currency Movements
Moving from equities to currencies requires you to adjust how you interpret quotes, margin, spreads and rollovers. A Primer On The Forex Market
Charting is not the only way to analyze the foreign-exchange market. Learn how to analyze the economic indicators. The Fundamentals Of Forex Fundamentals
Gain a trading edge by learning how macroeconomic forces play out differently for various pairs. Identifying Trending & Range-Bound Currencies

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See also Bureau de change

A commodity currency is a name given to currencies of countries which depend heavily on the export of certain raw materials for income. These countries are typically developing countries, eg. countries like Burundi, Tanzania, Papua New Guinea; but also include developed countries like Australia and Iceland. In the foreign exchange market, commodity currencies generally refer to the Australian Dollar, Canadian Dollar, New Zealand Dollar, and the South African Rand.

External links

• IMF's study on commodity currencies

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commodity currency is money that has intrinsic value and used as currency based on that fact, not by government decree, as with fiat currency.

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