If China is at the epicentre of a financial earthquake, then we felt a few aftershocks in the last 24 hours .
Firstly, Kazakhstan devalued its currency — the tenge — by abandoning a peg to the dollar and allowing the market to set the price.
The tenge collapsed about 27% against the dollar, with one buck now buying 252 tenge at the time of writing, according to the Bloomberg chart.
The Kazakh economy is heavily dependent on oil, which has fallen about 30% in the past few weeks
The low prices are crushing Kazakhstan’s economy. “The head of state stressed that due to the new economic reality it is needed to adapt to oil prices at $US30-40 per barrel,” the presidential press service said, according to a report from Reuters.
Oil took a fresh dive down yesterday on news that US crude inventories rose by 2.6 million barrels last week despite falling production.
US oil inventories are at the highest level for this time of year in at least 80 years.
The price crashed as investors fretted about oversupply of oil and falling Chinese demand. It continues to drift lower today.
Here’s the chart: