As the majority of currencies across the globe are getting crushed against the greenback, on mounting pressures from the debt crisis, there is no solid justification for fuel price increase, given the steep fall in oil prices, X-Trade Brokers analysts said.
“Oil prices have been subdued lately, on concerns that Greek woes could hurt the European currency and put a crimp on global recovery. Although the U.S. dollar – the currency for oil reference price – grew markedly against the leu, it doesn’t provide any solid grounds for the fuel price growth in Romania”, said Victor Safta (photo), head of X-Trade Brokers Romania.
Oil price opened at $87.47 per barrel in early May trades, and touched the one-year high of $89.51 in the same day. Oil prices remained subdued throughout May trades, finishing down to $71.77 per barrel, the lowest level since February last year.
“The U.S. dollar has been racing upwards against most of currencies around the world, on positive data pointing to a sustained economic recovery in the U.S, and also on the weakening of European currency amid pressures from the debt crisis that hit Greece”, X-Trade Brokers said.
In May, the U.S dollar soared 7.64% against the national currency, from 3.0861 (May 3) to 3.3219 (last Friday).
“The gap between oil price decline and U.S currency growth in the month of May suggests that a fuel prices increase driven by the dollar’s upward trend is not justified, at least for the time being. Even if we look at the past two months, things are still the same – May, oil price fell 12.69% while the U.S dollar rose 10% from 3.0183 lei/USD on April 1 to 3.3219 lei/USD at the end of last week”, said Victor Safta.
