Strong RMB to have mixed effect on oil By Wang Ying (China Daily) Updated: 2005-07-27 06:26
"Moreover, crude oil is not a product with much elasticity - a change in
price would not induce shake-ups within the overall market. The current soaring
crude prices on the international market will continue to hamper the country's
oil imports," he added.
He Jun, a senior industry analyst and vice-president of Beijing Anbound
Consulting Co, agreed with Deng in this respect, explaining that buying oil
products is not merely about the market situation, but sometimes more to do with
government concerns of a strategic nature.
"It (importing oil) should be a long-term plan, which is not affected much by
instant market shifts - let alone the adjustment to the exchange rate is only a
marginal 2 per cent," He said.
For the market of refined oil such as gasoline and diesel which has gone
through frequent price changes, analysts said the yuan revaluation will be
unlikely to result in a further fall of refined oil retailing prices, which saw
a hike of around 7 per cent last Saturday.
"On the one hand, the current refined oil retailing prices on the domestic
market are still much lower than those in the rest of the world. There is little
room for the nation's refined oil retailing prices to fall," DRC's Deng said.
"And on the other, the impossibility of cutting domestic refined oil
retailing prices also comes from the central government's effort to peg the
domestic prices more closely with the overseas market, which has been showing a
bullish trend," said Deng.
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