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Floating of China's Yuan May Have Oil Price Impact

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littlekracker


Floating of China's Yuan May Have Oil Price Impact

Monday, July, 26, 2010

China's plan for the yuan to float upward against the US dollar has highlighted the linkage between Chinese money supply and oil prices. Given the weight of Chinese demand in the international oil market, decisions by the People's Bank of China (PBOC) to increase money supply growth should support oil prices, while weakening money supply growth would have the opposite effect. Thus, Chinese money supply is among the key factors modulating demand and prices for commodies, including oil.

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