IMF urges fresh thinking on oil prices as dollar continues to fall

Officials from the CA Sri Lanka overseas chapters

Washington, Oct 17, 2007 (LBO) – The International Monetary Fund’s top economic researcher said the Fund was having a fresh look at the phenomenon of high oil prices which is partly caused by a weakening dollar, and urged emerging economies to re-think their exchange policies. . “Oil is denominated in dollars. As the dollar depreciates there is some tendency for the price to rise in dollars, not necessarily rise in euros, for example, or in other currencies,” Simon Johnson, director of the IMF’s Research Department said.

“I think this is something we are looking at, and we are discussing with people ways to best think about oil prices,” he said at a media briefing on the run up to the IMF’s and World Bank’s annual meetings in Washington.

Loose policy, high commodities

Global commodity prices tend to rise in dollar terms when the Federal Reserve runs loose monetary policy.

This causes the US currency to fall in terms of other currencies with tighter monetary policy as well as against commodities and precious metals.

Money printing by the Fed in the past forced it to abandon the link between the US dollar and gold which used to be known as the gold standard.

The roots of the creation of the IMF also lay in the problem of central banks, i

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