The changing nexus between commodity prices and the dollar: causes and implications

BIS Bulletin  |  No 74  | 
13 April 2023

Key takeaways

  • Commodity prices and the US dollar have moved in tandem recently, in contrast to their usual statistical pattern of moving in opposite directions.
  • The causes of the change in the relationship are partly temporary, such as the unusual combination of recent shocks, and partly structural, such as the United States' emergence as a net energy exporter.
  • The change in the nexus compounds the stagflationary effects of higher commodity prices for commodity importers, while its implications for commodity exporters are more ambiguous.
  • A lasting change in the nexus could create more difficult challenges for macro-financial stability frameworks, particularly in commodity-importing economies.