Climate Risk and Commodity Currencies
Copyright policy )Climate Risk and Commodity Currencies
The positive relationship between real exchange rates and natural resource income is well understood and studied. However, climate change and the transition to a lower-carbon economy now challenges this relationship. We document this by proposing a novel news media-based measure of climate change transition risk and show that when such risk is high, major commodity currencies experience a persistent depreciation and the relationship between commodity price fluctuations and currencies tends to become weaker.
- Norges Bank Norway
- BI Norwegian Business School Norway
Risk, VDP::Samfunnsvitenskap: 200::Økonomi: 210::Samfunnsøkonomi: 212, Climate, Exchange Rates, exchange rates, JEL: D84, JEL: D83, E13, commodities, C53, climate, C11, E31, risk, Commodities, ddc:330, E37, D83, JEL: C11, JEL: E31, D84, JEL: C53, JEL: E37, JEL: E13
Risk, VDP::Samfunnsvitenskap: 200::Økonomi: 210::Samfunnsøkonomi: 212, Climate, Exchange Rates, exchange rates, JEL: D84, JEL: D83, E13, commodities, C53, climate, C11, E31, risk, Commodities, ddc:330, E37, D83, JEL: C11, JEL: E31, D84, JEL: C53, JEL: E37, JEL: E13
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