Commodity currency

In the foreign exchange market, commodity currencies generally refer to the New Zealand dollar, Norwegian krone, South African rand, Brazilian real, Russian ruble and the Chilean peso.

This is hugely beneficial for economists and policymakers who want a reliable measure of future commodity prices.

Similar to the reasoning in the previous section, as seen in Figure 4, a decrease in GDP leads to deflation.

[citation needed] Most commodities that are tied to currencies are natural resources such as gold, oil, timber and other minerals.

Countries whose currencies do not hinge on commodity price movements are generally more willing to minimize harmful environmental processes, thus reducing affiliated externalities.

Countries whose currencies are impacted profoundly by commodities are generally less willing to tighten their environmental policies which would reduce externalities.

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