Within the next few years, look for the yuan/renminbi to become one of the world’s ‘convertable currencies.’ There are only seven at the time being.
For the first time ever, the Chinese yuan is one of the world’s ten most frequently traded currencies, according to a Bank of International Settlements (BIS) survey.
The currency ranked ninth on the bank’s top-ten list, jumping eight places from the seventeen spot it held when the survey was last conducted three years ago.
“The role of the renminbi in global FX trading surged, in line with increased efforts to internationalize the Chinese currency,” the BIS said.
However, slow progress in Beijing’s financial reforms has sparked doubts about the yuan’s increasing popularity.
For over three years, China’s financial market reform has been focused on the liberalization of its capital account and increasing the yuan’s convertibility but, as analysts from Societe Generale point out in a report, “change has been slow on the domestic front and this has at least partially been responsible for the disorderly development of the shadow banking system.”
“There’s clearly been a very active policy by authorities to push the internationalization and it is bearing fruit, but at the same time, we’re not going to see renminbi traded directly against the Venezuelan bolivar in the next couple of weeks. It’s more about a gradual shift; it’s a glacier moving rather than a snowball being thrown,” said HSBC’s forex strategist Dominic Bunning.
Full article: Yuan now one of world’s most tradable currencies (CNBC)