What Is COP26 And Why Does It Matter For Forex Markets?

With the energy prices increasing and leading to an economic repercussion for over 200 countries in Asia, North America, and Europe— COP26 (Conference Of Parties), a two-week event is about to start from November 01 to November 12, 2021, in Glasgow, Scotland.

What Is The Aim?

COP26, this month is all set to curb emissions, reduce coal issues, and raise billions in climate finance. And to keep the goal of 1.5 degrees of global warming in line. However, most developing nations are stressing over the point that most developed nations have destroyed the planet as they are industrialized, and it is now affecting other countries' economic progress.

Why Are Energy Supply Concerns Multiplying?

Because of the Paris Climate Agreement, various world's most significant economies, such as China, and the US, have tried to double down on their coal and oil usage as their primary energy sources. However, due to the remaining COVID effects, supply chains have been impacted a lot.

Companies are unable to procure raw materials within the right time. Additionally, with winter approaching the Northern Hemisphere, it is fair to assume that demand will outrun the energy supply. This can create a massive issue over the coming months.

How Can COP26 Make The Situation Worse?

It is a no-brainer that the world's largest economies are not doing great at achieving the 2015 Paris Climate Agreement goals. Due to some recent efforts to do so by cutting the coal consumption have decreased the electricity supply. This has impacted the global manufacturing houses in China and has increased the inflation rate in Europe and North America.

The goals set by COP26 are for a good cause, but without any alternative solutions for the same such as solar, hydro, and wind can grow intense problems for the world's largest economies in 2022.

Assets That COP26 Goals Can impact

The goals by COP26 can leave a long-term impact on many markets, mainly currencies and commodities. Now currencies whose economies are crucial exporters of fossil fuels such as the Canadian Dollar and Australian Dollar can witness an increase around the long-term potential.

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