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As industrial activity rebounds from last year’s economic downturn, the world is witnessing a coal shortage, all of which is driving up prices. Coal prices are destined to go even higher as they follow the rise of ‘coal currencies’ such as Australian Dollar (AUD), South African Rand (ZAR) and Columbian Peso (COP). The BofA Merrill …
As industrial activity rebounds from last year’s economic downturn, the world is witnessing a coal shortage, all of which is driving up prices.
Coal prices are destined to go even higher as they follow the rise of ‘coal currencies’ such as Australian Dollar (AUD), South African Rand (ZAR) and Columbian Peso (COP).
The BofA Merrill Lynch Global Report on energy pointed out that many “oil currencies” including UAE Dirhams (AED) and Saudi Arabian Riyal (SAR) are pegged to the US dollar, but coal exporters tend to keep a free float therefore currencies linked to coal have outperformed both their emerging market and G-10 peers.
The report notes that near upside gains in steam coal will be limited to US dollar weakness.
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