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There has been a dramatic change in expectations around the renminbi’s exchange rate. No appreciation over the past nine months has meant the previously one-sided bet on steady appreciation is over. Accordingly, businesses are no longer as eager as before to hold renminbi. Previously, corporations receiving payments in dollars were quick to exchange their earnings [...]
Note: This post is based on an author’s intervention at the International Conference of RCIE, KIET, and APEA on China and the World Economy, Seattle, March 16, 2012. The progress of China towards financial integration and the internationalization of renminbi is a matter of great importance. While the world economy remains financially unstable, accessing the [...]
Continuing on last week’s theme of expectations, let’s take a look at ongoing developments in the offshore renminbi market. Despite breathless predictions of continued growth by the investment banks, the offshore market has hit a rough patch and deposits in Hong Kong actually declined in October. What’s at work here? Well it seems that expectations [...]
The incremental approach Chinese policymakers have used for renminbi internationalization occasionally leads to strange outcomes, such as a markedly different price for offshore and onshore renminbi. Since the creation of a cross-border trade settlement scheme in 2009, renminbi deposits have rapidly accumulated in Hong Kong . The buildup of renminbi deposits has occurred primarily through trade settlement (Chinese [...]
Nicholas Consonery is an Asia Analyst at Eurasia Group. China’s leadership faces many difficulties these days. Exciting international investors about the Chinese currency, the renminbi, generally isn’t one of them. In fact, the explosion of the offshore renminbi market in Hong Kong since 2010 is perceived as a major success in Beijing. It will probably [...]
Be sure to check out the Economist.com which is currently holding a moderated debate related to Arvind Subramanian’s new book Eclipse: Living in the Shadow of China’s Economic Dominance. The motion being debated is: “This house believes that the yuan will be the world’s main reserve currency within 10 years.”
All the discussion about including the renminbi in the Special Drawings Rights (SDR) basket established by the International Monetary Fund (IMF) is a side-show or distraction with the real action being the conditional imminence of the renminbi’s rise. That is not a judgment, just a description of reality. Last week, the renminbi was in the [...]