Why are some currencies like CAD, AUD known as commodity currencies?
$\begingroup$
$\endgroup$
2
-
6$\begingroup$ The Canadian and Australian economy are very dependent on raw commodity exports. So their value might be rather dependent on international commodity prices. $\endgroup$– snoramCommented Apr 23, 2015 at 15:09
-
$\begingroup$ I voted to close because it is unclear what you are asking for. You can edit the question to add more information. $\endgroup$– JamzyCommented Apr 24, 2015 at 3:28
Add a comment
|
1 Answer
$\begingroup$
$\endgroup$
From wikipedia: 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, e.g. countries like Burundi, Tanzania, Papua New Guinea; but also include developed countries like Canada and Australia.
In a more practical sense, if the value of a currency is heavily dependent on the value of the natural resources exported, it can be considered a commodity currency. For example, look at the appreciation of the AUD during the recent mining boom. This appreciation was driven primarily by increased Chinese demand raising prices of commodities Australia was endowed with.
