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Why does the depreciation of the dollar increase costs and commodity prices rise?
Because the main commodities are denominated in dollars, the depreciation of the dollar will spend more money to buy commodities, and commodities will naturally increase in price; At the same time, because the holders of dollar assets want to preserve their value, they will also convert dollar assets into commodity markets, which further increases the price increase of commodities.

Extended data:

Commodity refers to the material commodity that can enter the circulation field, but is not a retail link, and has the property of commodity and is used for industrial and agricultural production and consumption. In the financial investment market, bulk commodities refer to homogeneous and tradable commodities widely used as industrial basic raw materials, such as crude oil, non-ferrous metals, steel, agricultural products, iron ore and coal. Including three categories, namely energy commodities, basic raw materials and agricultural and sideline products.

Commodities can be designed as futures, and options can be traded as financial instruments, which can better realize price discovery and avoid price risks. Because bulk commodities are mostly industrial bases and at the forefront, the changes of futures and spot prices reflecting their supply and demand will directly affect the whole economic system. For example, rising copper prices will increase the production costs of electronics, construction and power industries, while rising oil prices will lead to rising prices of chemical products and push up the prices and supply of other energy sources such as coal and alternative energy. Investors, especially those who invest in related industries, should pay close attention to the supply and demand of commodities and price changes.

Commodities also have five characteristics:

1, large supply and demand

2. Country of origin

3. Raw materials

4, the national unified price limit

5, affect the national economy and people's livelihood

QE3 is coming, and commodities are expected to become a substitute for the US dollar. To some extent, QE3 further shows that the global monetary policy has further slipped to the cliff of "liquidity flooding", and the future monetary system is facing a huge impact risk. Although the actual effect is limited, its negative effect will be more obvious, and the United States will face further pressure from the fiscal cliff. However, under the background of "gradual easing", the monetary credit risk in the global monetary system has been further impacted. The increasing credit risk of money will eventually lead investors to stay away from the paper money system. "When people start to stay away from the dollar, commodities will become the best substitute", among which commodities with strong financial properties such as gold, silver, copper and crude oil will undoubtedly become the brightest stars.