China’s devaluation of the yuan has created more uncertainty around the trade war with the US, but lower prices have ofset the impact on crude demand. The People’s Bank of China allowed the yuan to fall to an 11-year low against the dollar in early August, blaming “unilateralism, trade protectionism and tarif increases on China”. The bank set the midpoint of the yuan’s daily trading range above Yn7 to the dollar for the frst time since 2008 on 8 August, indicating more weakness is likely (see graph). The sudden devaluation came just days after US president Donald Trump derailed trade negotiations by threatening to impose new tarifs on almost all remaining imports from China next month.
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