home > by publication type > podcasts > Understanding the Correlation between Oil Prices and the Falling Dollar
Email
| Interviewee: | Brad W. Setser, Fellow for Geoeconomics, Council on Foreign Relations |
|---|---|
| Interviewer: | Lee Hudson Teslik, Associate Editor, CFR.org |
June 18, 2008
Two of the defining geoeconomic trends of the past two years have been surging oil prices and a falling U.S. dollar. Of late, these trends show an increasingly tight correlation—with the falling dollar mirroring the rising price of oil. Brad W. Setser, CFR's fellow for geoeconomics, explains this dynamic. Setser says rising oil prices and a falling dollar are most basically correlated in the sense that they both reflect the same underlying geoeconomic factors—a weakening U.S. economy alongside much stronger growth in the developing world. He also discusses the possibility of a more direct, causal link, going in both directions.
In terms of oil prices directly affecting the valuation of the dollar, he notes:
In terms of the dollar's fall affecting oil prices, he notes:
Setser concludes that correlation between oil prices and the dollar won't stay as tight as it is now, but that some mirror-effect will continue, given the slew of geoeconomic factors working in favor of correlation.
Weigh in on this issue by emailing CFR.org.
I understand that I may access this podcast solely for my personal use. Any other use of the file and its content, including display, distribution, reproduction, or alteration in any form for any purpose, whether commercial, noncommercial, educational, or promotional, is expressly prohibited without the written permission of the copyright owner, the Council on Foreign Relations. For more information, write webmaster@cfr.org.
To order Task Force reports, Council Special Reports, and Critical Policy Choices, please call, fax, or order online from our distributor, the Brookings Institution Press: phone +1.800.537.5487, fax +1.410.516.6998.
For information on other reports that are not for sale, or for general publications information, please call +1.212.434.9516 or email publications@cfr.org.
Start-Up Nation addresses the trillion-dollar question: How is it that Israel—a country of 7.1 million, only sixty years old, surrounded by enemies— produces more start-up companies than large, peaceful, and stable nations like Japan, China, India, Korea, Canada, and the UK? With the insights of geopolitical experts and investors, the authors examine this nation’s adversity-driven culture to answer this question and offer prescriptions for a global economy on the rebound.
In Forces of Fortune, Vali Nasr presents a paradigm-changing revelation that will transform the understanding of the Muslim world at large. He reveals that there is a vital but unseen rising force in the Islamic world—a new business-minded middle class—that is building a vibrant new Muslim world economy and that holds the key to winning the cold war against Iran and extremists.
In Cuba: What Everyone Needs to Know, Julia E. Sweig presents a remarkably accessible portrait of Cuba's unique place on the world stage over the past fifty years, including its internal politics, its often fraught relationship with the United States, and its shifting relationship with the global community.
Complete list of CFR Books
Copyright 2009 by the Council on Foreign Relations. All Rights Reserved.