PDSnet Glossary

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Definition

This is a currency the strength of which is primarily determined by a or group of commodities. Typically, this can be found in third world countries, a large percentage of whose income is derived from one commodity. The rand is still regarded as a commodity currency although less now that precious metals have declined in importance. Other countries which have commodity currencies are New Zealand, Norway (because of the North Sea Brent oil) and Chile. The New Zealand dollar is dependent on the export of timber and dairy products.

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