In a note published by German investment bank Commerzbank on Monday, analyst at German investment bank Commerzbank Ulrich Lichtmann explained how the US dollar was a major beneficiary of yesterday’s OPEC + decision to cut oil production, which resulted in a strong rise in oil prices in the G10 countries.
The head of foreign exchange and commodities research at Commerzbank pointed out that the dominance of the dollar is an economic concept and not just an accounting concept, which makes the dollar able to benefit greatly from the rise in oil prices as a result of OPEC’s decision.
And he explained, explaining that if energy production within the United States becomes more valuable because its production decreases in OPEC + countries, then oil production in the United States will become more profitable and attract capital and labor, and accordingly, everything else that the United States produces also becomes more valuable, which is What supports the rise of the dollar.
For example, the chief analyst explained that the New York State burger is the highest value, because it has to be produced despite the fact that those who prepare it can get more lucrative jobs in the oil fields, and despite the fact that those who provide the capital to set up the restaurant They can just as easily invest in shale companies.
He added that this makes the burger in New York more valuable than the same burger sold in Hamburg, Milan or Tokyo, and if this effect is reflected in the rise in the prices of other commodities also denominated in dollars in New York, the US Federal Reserve will certainly try to prevent this by raising interest, which is what It will be in the interest of the dollar.
The commodity and currency expert at Commerzbank added that this is the reason behind the rise in the value of the dollar now, and not because the global oil price is valued in the US dollar, which really illustrates the economic concept of the dollar’s dominance.