Bank Recycling of Petro Dollars to Emerging Market Economies During the Current Oil Price Boom

Wiegand, Johannes

doi:10.5089/9781451870381.001

Cited by 6 publications

(4 citation statements)

References 15 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Relatively recent studies imply that the relationship between oil prices and exchange rates may not be constant through time and can vary for different time periods. Recent literature in this area, including Basher et al (2012), Lizardo and Mollick (2010), Miller andRatti (2009), Narayan et al (2008), and Wiegand (2008), yield important results. Lizardo and Mollick (2010) show that an increase in the real price of oil leads to a significant depreciation of the U.S. dollar relative to the currency of oil-exporting countries, however, the currency of oil-importing countries depreciated relative to the U.S. dollar in Downloaded by [University of Otago] at 18:51 02 January 2015 the same scenario.…”

Section: Literature Reviewmentioning

confidence: 93%

“…Wiegand (2008), for example, discusses the mechanism of recycling petrodollars and its importance for emerging market economies. Wiegand (2008) points out that even though bank lending is still an important vehicle for recycling petrodollars, investing in the global securities market had become an important alternative route in the decade preceding his study. He also emphasizes that although the size of deposit flows differs sharply between emerging economies, in the case of a drop in oil prices, they will all experience a funding squeeze.…”

Section: Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

Oil Prices and Emerging Market Exchange Rates

Turhan¹,

Hacihasanoglu

Soytaş

2013

Emerging Markets Finance and Trade

127

View full text Add to dashboard Cite

This paper investigates the role of oil prices in explaining the dynamics of selected emerging countries' exchange rates. Using daily data series, the study concludes that a rise in oil prices leads to significant appreciation of emerging economies' currencies against the U.S. dollar. The authors divide daily returns from January 3, 2003, to June 2, 2010, into three subsamples and test the impact of changes in oil prices on exchange rate movements, generalizing impulse response functions to track the dynamic response of each exchange rate in three different time periods. Their findings suggest that oil price dynamics changed significantly in the sample period and the relationship between oil prices and exchange rates became more obvious after the 2008 financial crisis.KEY WORDS: emerging market exchange rates, financial crisis, oil prices.Ibrahim Turhan (ibrahim.turhan@imkb.gov.tr) is chairman and CEO, Østanbul Stock Exchange, Ankara. Erk Hacihasanoglu (erk.hacihasanoglu@imkb.gov.tr) is director of the Research Department, Østanbul Stock Exchange, Ankara. Ugur Soytas (soytas@metu.edu.tr) is a professor in the

show abstract

Section: Literature Reviewmentioning

confidence: 93%

Section: Literature Reviewmentioning

confidence: 99%

Oil Prices and Emerging Market Exchange Rates

Turhan¹,

Hacihasanoglu

Soytaş

2013

Emerging Markets Finance and Trade

127

View full text Add to dashboard Cite

show abstract

“…Following the 1970s' oil price hikes, US and some other Western banks were flush with liquidity as oil-exporting countries deposited their growing dollar reserves with them. These banks encouraged Latin American and other developing country governments to borrow, offering them relatively low real interest rates in the face of high inflation (Wiegand, 2008). When the US Federal Reserve began raising interest rates from 1979 to check inflation, some other major central banks quickly followed.…”

Section: Replaying the 1980s?mentioning

confidence: 99%

Chronicles of Debt Crises Foretold

Chowdhury,

Sundaram

2023

Development and Change

View full text Add to dashboard Cite

The debt crises looming in developing countries are being exacerbated by changing debt composition. Declining net foreign exchange earnings have worsened their predicament. As concessional development finance declined, many governments turned to riskier forms of borrowing from international capital markets. Concerted interest rate hikes are supposed to stem inflation; however, given that prices have mainly risen due to supply chain disruptions caused by war, sanctions and pandemic, interest rate increases are likely to trigger more debt crises, much worse than before. Current discourses, for example about China's ‘debt trap’ diplomacy, distract from urgently needed international and national measures to avert the looming debt crises.

show abstract

“…Enders (2009) builds a simple two-sector model to illustrate the joint determination of the current account and the real exchange rate in oil-exporting countries. Wiegand (2008) finds that sharp changes in the flows of savings from oil-exporting countries may be disruptive to oil-importing countries that rely on bank loans to finance external deficits, as do many central and eastern European countries.…”

Section: Does Trade and Financial Globalization Cause Income Inequality?mentioning

confidence: 99%

IMF Research Bulletin, September 2009

Dept.¹

2009

IMF Research Bulletin

View full text Add to dashboard Cite

The integration of the world economy through the progressive globalization of trade and finance has reached unprecedented levels, surpassing the previous peak prior to World War I. This new wave of globalization is having far-reaching implications for the economic well-being of citizens in all regions and among all income groups, and is the subject of active public debate. This article provides an overview of the latest research about the effects of trade and financial globalization on income inequality.The global economy has changed dramatically over the past two decades. World trade has grown fivefold since 1980, and its share of world output has risen from 36 to 55 percent. Trade integration accelerated in the 1990s as the former Eastern bloc countries entered the global trading system and developing countries in Asia progressively dismantled trade barriers. The globalization of financial flows has also been rapid. Total cross-border financial assets more than doubled as a share of output between 1990 and 2004, from 58 percent to 131 percent of global GDP. The advanced economies continue to

show abstract

Bank Recycling of Petro Dollars to Emerging Market Economies During the Current Oil Price Boom

Abstract: This Working Paper should not be reported as representing the views of the IMF.

Cited by 6 publications

References 15 publications

Oil Prices and Emerging Market Exchange Rates

Oil Prices and Emerging Market Exchange Rates

Chronicles of Debt Crises Foretold

IMF Research Bulletin, September 2009

Contact Info

Product

Resources

About