Today China raised a fuss on Forex by decreasing interest rates by 1.9%. Shortly after this Australian dollar, with its exchange rate directly dependent on renminbi, suffered a decline and lost 1.3%. In connection with this, oil quotations jumped up and the Brent price rose above the 51.60 mark and then fell below 51.00.
But we have to look beyond that because such a steep and significant weakening of renminbi will manifest itself over the long run. It seems that now we can forget about increase in FRS interest rates in 2015. As you remember Yellen has repeatedly noted that they review the overall situation on the international scene, and they don’t need a stronger US dollar because it will prove to be disadvantageous for exporters.