A renminbi threat to oil?
A major Chinese currency devaluation probably wouldn’t hurt Chinese oil demand as much as some think
Oil demand and stockpiling in China will remain strong this year as speculation, particularly in the West, that Beijing will do a massive 15-20% devaluation of its currency, appears to be just that. Chinese oil consumption and imports are sensitive to price changes – so a renminbi devaluation that made crude more expensive in the local currency would hurt both. But domestic oil demand, in particular, also reacts to GDP. A weaker renminbi would be expected to make exports of Chinese goods more competitive, boosting manufacturing activity. In turn, this would lift demand for diesel (used in manufacturing) and offset any weakness in gasoline. Financial markets have for months been humming with
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