I was on Twitter a few minutes ago and my feed was full of people talking about the fall in petrol prices, some of them were talking about consequences in the dollar rates and I don’t understand at all. How does the petrol price affect world economy? And how does it affects all of us non billionaire people?
In: Economics
One of the reasons the dollar is so valued is the petrodollar where in all oil purchases are made in the dollar and all prices are listed in the dollar.
SO basically china has a currency. They need to buy oil but they need dollars. They cant use their currency and they cant trade their currency on the open market or else it would be heavily devalued.
So they rely on trade for all their needs to get dollars to buy oil.
The dollar is the world’s reserve currency. Basically if the value of the dollar went down, pretty much the value of every currency in the world woudl go down. China for example’s, entire economy would crash because they hold so much US debt in the dollar.
Latest Answers