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Oil prices trading up 2 percent on China Yuan decision
Published on June 21, 2010 by oilprices · 1 CommentCrude oil prices are trading higher by over 2 percent on Monday after China decides to allow a more flexible Yuan.
WTI Light crude oil futures are at $78.84 at midday Singapore time on the NYMEX, while in London, Brent crude oil futures are trading at $79.76 on the ICE Futures Exchange.
A statement by the People’s Bank of China on Saturday it would ‘strengthen the flexibility’ of the country’s currency has also nudged Asian stock markets higher.
Analysts have interpreted the Chinese central bank’s statement as a sign that Beijing was ready to adjust the dollar peg in place for two years and allow the currency to rise.
China has effectively pegged the yuan at about 6.8 to the US dollar since the middle of 2008 to prop up exporters during the world financial crisis, but Beijing has come under mounting pressure ahead of next weekend’s G20 summit in Canada to allow the Yuan currency to strengthen.
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And this does what to demand to justify an increase in the price of a barrel of crude oil?
If one really reads the Chinese statements and the analysis of their words, this will in effect do nothing to the value of the Chinese currency.