petrodollar

Definitions

Banking

  • noun a dollar earned by a country from exporting oil, then invested outside that country

Economics

  • Refers to the profits made by oil exporting countries when the price rose during the 1970s, and their preference for holding these profits in U.S. dollar-denominated assets, either in the U.S. or in Europe asEurodollars. A portion of these were in turn lent by banks to oil-importing developing countries that used them to buy oil.

Forex

  • Cash obtained in U.S. Dollars, or another foreign currency used for oil transactions, from selling oil and which is then typically deposited by the oil exporter into an account at a Western bank. Obtaining assets from abroad and repaying international debts are some possible uses of petrodollar income, although it can also be repatriated into local currency via the forex market when needed.
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