How Commodities will affect Six Currencies in 2017

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Commodity-based currencies depend largely on market conditions of their country’s income earners. This factor makes them some of the most volatile currencies. Demand for commodities will dictate the rise and fall of these currencies value. Investors will need to understand the impact of commodities to these currencies before they invest. Let’s examine how prices of goods will affect six currencies.

Mexican Peso

Mexico is a huge exporter of oil. The price of oil has been going soft in the last quarter of this year. The situation is unlikely to change next year as OPEC nations make good on their promise to decrease oil production. However, the countries silver deposits are set to cushion the peso against further decline. The country is one of the largest producers of the precious metal. The balance of prices of these two commodities will determine the value of the Peso next year.

The South African Rand

South Africa’s economy depends largely on the demand of its mineral deposits across the world. Chief among these is platinum and gold. Gold stocks are set to soar next year. It is estimated that 1 troy ounce will cost about $1500 by end of next year. Global politics are going to play a big part in the gold stocks. It is estimated that the prices will soar as investors remove their money from safe stocks. The Rand may reach an exchange rate of 16 to one dollar in 2017.

Russian Ruble

Russia also largely depends on oil and gas for its revenues. Next year the ruble will be affected by oil prices. Russia also exports precious metals like Platinum and the demand of these materials as well as the shift of stocks will determine the value of the ruble next year.

Brazilian Real

Brazil’s economy depends on agriculture to a large extent. The country’s agricultural production is expected to grow to new heights next year. It is a huge exporter of corn and soy and this is going to play a big part in the real’s value. The real is expected to trade at about 3.56 in the coming year.

Canadian dollar

Canada is the fourth largest producer of oil. Its currency has a correlation of 80% with the price of oil. It is expected that the value of Canadian dollar will fall partly because of the soft oil prices expected in the coming year. Interest rates and inflation in the US will also play an important role. The exchange rate by mid next year is expected to be 70cents to the dollar.

New Zealand dollar

New Zealand like Brazil has an agricultural based economy. The country depends on sheep’s wool, dairy and even timber. Prices of dairy products have been falling since June this year. If the downfall continues, New Zealand’s economy will be negatively affected and this will affect the value of the dollar.

Commodity-based currencies are vulnerable not only to political upheavals but also to the market situation. Knowing what commodities to look at, is the first step to gaining from investments in these currencies.2017 will be an interesting year for those looking to invest in these currencies.

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How Commodities will affect Six Currencies in 2017

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