October was a tough month for sharemarkets and commodities, but not if they were priced in Australian dollars.
The Reserve Bank said yesterday that preliminary estimates for October indicate that its Commodity Price Index fell by 5.1% (on a monthly average basis) in SDR terms, following an increase of 0.7% (revised) in September.
The major global commodity price indexes all fell
The Reuters-Jefferies CRB index, a benchmark for global commodities, fell more than 23% in October, its worst month on record. The next worst month was September, when it fell 11.8%.
SDRs are Special Drawing Rights, which are a way of trying to reduce currency values to a common value for all the countries in the International Monetary Fund or other important global bodies.
It’s a way of removing distortions in value in individual currencies and it reflects the sharp fall in commodity prices in October, led by the likes of oil and copper, plus wheat and sugar.
The RBA said that the largest contributors to the fall in October were falls in the prices of copper, wheat, nickel and aluminium.
But the slump in commodity prices had a negative impact on the value of the Aussie dollar, which fell sharply in the month.
The Australian dollar fell by around 16% against the US currency, 21.7% against the yen and nearly 14% on a trade weighted index.
The RBA said that in Australian dollar terms, the Index rose by 9.5% in October following an increase of 6.4% (revised) in September.
Coal and iron ore price all had an impact, especially in Australian dollar terms.
