The recent crash in emerging market currencies could hit global oil demand if it continues, the International Energy Agency (IEA) warned on Thursday, as it forecast an improvement in oil supply over the coming months.
Emerging markets have been pounded in 2013 amid speculation of an end to the U.S. Federal Reserve’s bond-buying program, with currencies from countries including India, Turkey, Russia and Brazil coming under intense pressure. As oil is priced in dollars, depreciation in an oil-importing country’s currency versus the dollar means the cost of importing oil for that country will rise – and could result in a reduction in demand.
“The rapid depreciation of many emerging market currencies since 1Q13 (first quarter of 2013), if sustained, may adversely affect oil demand,” the Paris-based agency said in its September oil market report.
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