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Some comment from someone living in a Middle East OPEC country:
- situation is indeed turning into big Government deficit territory, allthough most of the immediate effects are cushioned by Government's deep reserves;
- some M.East OPEC currencies are fixed to the us$,
some are linked to a basket ($,Yen,DEM,Pound),some
more or less float: so the situation is not identical
for all OPEC countries ( i.e. I speak for M.East only !);
- while M.East is big crude exporter , they are also
very big importers: consumer goods, cars, military
hardware, food, building materials,etc.,etc.;
- The economies of US,W.Europe + Japan are by far the
3 major origins of imported ( high-added-value) goods. Save Japanese yen, the appreciation of US$ against W.European currencies has been quite modest.
As a matter of fact, the us$ is now dropping against W.European currencies!
- OPEC imports from countries where currencies have devalued so dramatically, i.e. SEAsia, Russia,etc. are exactly those countries where relative few goods are imported from;
- While the argument that us$ value has increased certainly has positive impact on us$ earnings,i.e. revenues from crude exports, I venture to claim that the impact of lower crude + petroleum product prices far outperforms the benefits of the currency play;
- another interesting thing to note is that in all
M.East Opec countries the rate of consumer price inflation is now pretty much stuck in range 8-12%/year,with Iran even seeing 20-30% inflation year on year.
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