Published On: Wed, Feb 6th, 2013

Commodity Currencies

The Commodity Currencies are the currencies of countries that derive a large amount of their GDP from the production and export of commodities.

This group includes the Australian Dollar; AUD; the New Zealand Dollar, NZD; the Canadian Dollar, CAD; and the Norway Kroner, NOK.  In the case of the AUD, Australia produces large amounts of Iron ore, Nickel, Gold, Silver, etc.  Much of these precious metals and raw materials are exported to nations.  Commodity Currencies are expected to get stronger during strong economic growth periods due to the increased demand for the raw materials they produce and export.  One of the main reasons is that importing companies must go in the Forex market and sell their home country’s currency to but the exporting country’s currency in order to facilitate payment of the purchase of the raw materials.  This is repeated many times over from many importers causing the exporting currency (Commodity currency) to get stronger over time.

Share Button

About the Author

- Marcus Holland has been trading the financial markets since 2007 with a particular focus on soft commodities. He graduated in 2004 from the University of Plymouth with a BA (Hons) in Business and Finance.