China Currency Devaluation – Not a Currency War
Contrary to some media speculation, China’s new foreign exchange policy and the consequent RMB devaluation is not the start of a currency war. The move should be viewed in the context of China’s financial market reform and the country’s attempt to have the IMF add RMB to the Special Drawing Rights currency basket. With a low crude price, The RMB’s depreciation will not undermine China’s willingness to import crude. There will be no revival of export-led economic growth that would stimulate additional demand for diesel or other industrial fuels.
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