Oil prices up after China's currency announcement

21 June 2010

Written by Kim Bardsley

Crude oil prices moved higher on the New York Mercantile Exchange this morning (June 21st) as traders reacted to China's plans to allow its currency to trade more openly.

Since the beginning of the financial crisis, the yuan has been fixed against the US dollar, allowing the country to benefit from buoyant export trade.

Following on from last week's 4.8 per cent gain, crude prices were strong again during the Asian trading session, rising $1.20 to $78.38 a barrel by 03:06 Central Standard Time.

Ben Westmore, a commodities analyst at National Australia Bank, told Reuters that the yuan announcement may help to boost Chinese crude imports.

"China is important for the global oil market and an appreciating yuan is going to help fuel its imports," he said.

Heating oil prices also climbed following the announcement, while the dollar was down against a basket of currencies including the Australian dollar and the euro.