According to the Organization of the Petroleum Exporting Countries (OPEC), gains from the prior month were erased in July as the U.S. dollar index fell by 1.6% month-over-month (m-o-m). In June, the dollar index barely climbed by 0.3% month-over-month for the second consecutive month. This was stated by OPEC in its August Monthly Oil Market Report.
The research said that the dollar declined even though the Federal Reserve raised interest rates by 25 basis points (bp) in July, while also describing the effects of inflation and the currency on oil prices. This, it claimed, highlighted a change in risk perception as investors’ view for the global macroeconomy improved and financial markets bet that the American economy would escape recession.
According to the OPEC report, Year-on-Year (Y-o-Y), the index was down by 5.2 per cent. The OPEC report said the dollar experienced mixed movement against major developed market currencies for a second consecutive month in July.
It said it recovered against the euro by 2.2 per cent m-o-m, but receded against the yen and the pound by 0.2 per cent and 2.2 per cent, respectively, over the same period. It said Y-o-Y, the dollar was up by 8.9 per cent and 3.0 per cent against the euro and yen, respectively; however, it was down by 7.1 per cent against the pound over the same period.
“In terms of emerging market currencies, the dollar declined for a second consecutive month in July against the rupee and the Brazilian real by 0.1 per cent and 1.1 per cent respectively, m-o-m.
“Meanwhile, it advanced against the Yuan for a second consecutive month by 0.3 per cent m-o-m,” the oil market report said.
It said Y-o-Y, the dollar was up by 3.2 per cent and 6.7 per cent against the rupee and yuan, respectively; however, it was down by 10.6 per cent against the real over the same period. It said the differential between nominal and real OPEC Reference Basket (ORB) prices widened m-o-m.
It said inflation (nominal price minus real price) went from negative 1.78 dollars per barrel in June to negative 3.11 dollars per barrel in July, a 76.7 per cent increase m-o-m.
It further stated that in nominal terms, accounting for inflation, the ORB price went from 75.19 per cent per barrel in June to 81.06 per barrel in July, a 7.8 per cent increase m-o-m.
It added that Y-o-Y, the ORB was down by 25.3 per cent in nominal terms. In real terms (excluding inflation), it said the ORB went from 76.95 dollars per barrel in June to 84.17 dollars per barrel in July, a 9.4 per cent increase m-o-m.
“Y-o-y, the ORB was down by 24.4 per cent in real terms,” it said.
