The price of oil suffered a great plunged in 2015 which affected the production and distribution of oil globally. When this situation occurred, about half the worth of oil fell off the price taking the market level to heights never imagined before. According to Energy Information Administration prediction, oil was going to rise again although it could take a while for it to get to its normal range of $90 – $100.
The effect of this massive price drop led to thousands of people losing their jobs as many companies cut their budgets and began to strategize using current oil prices. But this did not stop the looming effect of the decline in oil prices.
However, many countries have been drastically affected by the falling prices of oil. Their currencies are struggling significantly due to the falling oil prices and this is because sales of oil are a major part of their revenue generation. We’re going to be looking at the currencies of such countries as stated on Oil Profits that have been affected by the dwindling prices of oil and the impacts on their economy.
The Canadian Dollars
The Canadian Dollars was part of the currencies that suffered from the great recession in 2015. The currency hit an 11-year all-time low. The then Governor of the Bank of Canada predicted that the country would bounce back from the fall in oil prices. However, since the price of oil is in dollars and a strong correlation exists between the Canadian dollars and the US dollars, it has been able to rise as the price of oil rose against the dollar once more
The Russian Ruble
Russia was one of the countries to suffer most from the declining prices of oil. They were forced to increase their interest rate to over 17% to fight capital flight from their economy. The main issue with Russia is that its economy relies heavily on oil and gas production. Russia’s energy export accounts for over 70% of their export and their energy income cover 50% of the country’s federal budget.
Russia has been warned by the World Bank to diversify its economy as a severe price crash would crumble their economy. During the price declination era, the Russian Ruble lost 49.05% of its value however, since the turn of events and the rise of oil prices, Russia has been able to stabilize its economy although they have put plans in place to diversify its economy.
The Colombia Peso
Not a lot of people know that Colombia is one of those countries that depend on its energy exports. They are one of the most energy-dependent countries as it’s a major source of their country’s revenue. However, since the crash of oil prices, they have now attempted to diversify its economy into emerging markets.
This diversification will take time, resources and education to materialise so the best time to start pursuing that cause will be now as the Colombian Peso has started regaining value against the US dollar after falling 37.86%.
These are not only the currencies that suffered from the great recession of 2015 as we still have the Brazilian Real, the Nigerian Naira, Saudi Arabia, Iran, Iraq, Venezuela and the Norwegian Krone. These currencies have some correlation with oil prices as their value rises and falls against the dollar.
If the cost of these countries oil rise, these currencies would notice some appreciation against the dollar.