China is proactively promoting the international utilization of the renminbi. Local experts and government officials have confirmed this development, citing that it is a campaign in line with the Asian economic giant’s economic transformation toward a more open development paradigm.
We think the Chinese renminbi is becoming more prominent in this decade, considerably affecting the currency markets. Hence, we find this latest foreign exchange news significant to share with our readers, especially those trading the official currency of the People’s Republic of China.
According to the November 1, 2021 news posted online by Chinese business news and information source China Daily, experts on the matter remarked that China is promoting the renminbi to contain external shocks.
The country also aims to decrease foreign exchange volatility. The Society for Worldwide Interbank Financial Telecommunication or SWIFT has released the latest RMB Tracker.
This monthly report shows the renminbi’s progress towards becoming an international currency. Based on the SWIFT document, the Chinese yuan has kept its position by September as the fifth most active foreign currency for international payments by value.
The People’s Republic of China’s official currency showed a 2.19-percent share, compared with the 1.95-percent in 2020. Compared with last August, the renminbi payments value has surged by 6.67 percent overall.
Experts laid out the important measures to steadily promote the internationalization of one of the world’s reserve currencies. One of the steps is strengthening the monitoring of global Chinese yuan flows, price modifications, and asset allocation.
Foreign exchange professionals also shared that improving the macro-prudential policy system of the renminbi’s exchange rate could help in the currency’s internationalization process. Zhou Chengjun remarked that the evolution of China’s economic growth model and opening-up comes with the renminbi’s internationalization, which is historically rare for any territory.
The People’s Bank of China’s Financial Research Institute Director spoke at the 87th International Forum on China Reform last Saturday, October 30. Zhou pointed out that when the Chinese yuan has become a national payment means, it can effectively diminish China’s dependence on other major foreign currencies such as the US dollar in international trade and investment.
He also mentioned China’s move to promote the renminbi targets forming exchange rate equilibrium decided by international market transactions. The Chinese central bank official relayed that such premise is permitting more foreign investors to hold renminbi-denominated assets, either via the opened Chinese yuan financial product trading or under the capital account.
We think China is quite eager to promote its status in the international financial system. Thus, it is pushing the renminbi to be like the US dollar. We understand that China wants to revolutionize its economy and ascend as an economic power.
We find this objective quite ambitious positively, and we think the renminbi can achieve a status similar to the US dollar. However, we believe this milestone will take a long time and will involve a very extensive process.