“…Secondly, the link between the oil price and U.S. dollar exchange rate can be apprehended through the lens of petrodollars recycling effects and portfolio Contents lists available at ScienceDirect journal homepage: www.elsevier.com/locate/enpol models (Krugman, 1983a(Krugman, , 1983bGolub, 1983), which were designed to account for trade and financial interactions between the United States, oil-producing countries and third countries (especially Europe). Thirdly, referring to the literature on equilibrium exchange rates (Clark and MacDonald, 1998;Faruqee, 1995), if a country accumulates foreign assets, its exchange rate appreciates. This movement occurs without impeding the country's current account balance because capital income takes over the loss in trade receipts induced by the deteriorated competitiveness.…”