The future of the RMB: special focus

By:
Published on:

An in-depth guide to global currency wars; how Beijing is seeking to globalize the renminbi, through currency swaps and trade-financing facilities; the rise of the offshore bond market; and how fee-hungry banks are salivating at the prospect of the RMB’s growth.

China: special focus

Bric: special focus
Emerging markets: special focus

FX: China ponders implications for renminbi of Trump victory
November 2016

Trump China monkey-R-600
The US president-elect has talked tough on China, but he could be good news for China’s economy and its currency.

FX: RMB joins the SDR basket
October 2016

Renminbi basket-R-600
The renminbi’s inclusion in special drawing rights (SDR) is 'the biggest structural event in FX since the creation of the euro'.

China looks forward to second phase of CIPS
September 2016
As the China International Payment System (CIPS) approaches its first anniversary, there is much anticipation around how the second phase of the project will impact RMB settlement volumes.

China retail gold survey 2016: China steps towards gold dominance
August 2016


Gold bars-R-600
"For China, the strategic mission of gold lies in the support of renminbi internationalization."

MSCI decision tells China it can’t always get its own way
June 2016
Wednesday’s decision by MSCI to delay membership for Chinese A-shares in the MSCI Emerging Markets Index serves a number of purposes.

Asia: China's moment of truth
April 2016


China clock illustration-600
Wherever you look in the Chinese economy there are mixed messages, not least in the recent history of the renminbi.

China’s muddled FX policy sows reform doubts
March 2016


Renminbi concern-R-600
China has reportedly drafted a Tobin tax on foreign currency transactions – just the latest in a series of measures that appears to backpedal on financial reform. However, bulls say it’s a classic move by Beijing to limp towards reform without subjecting domestic markets to volatility.

China A-shares set for MSCI index breakthrough


china-a-shares-600
March 2016
QFII reforms will open up access to domestic stocks; China will have big weighting in EM index.


Emerging markets: Big trouble from brittle China
Terracotta-160x186
February 2016
The January fall in emerging market currencies, the exodus of foreign capital and a global bear market in equities all point to a new financial crisis. How China reacts to this threat holds the key for emerging markets.

Beijing seeks to allay fears of China crisis
February 2016
Market and currency turmoil weigh on growth; financial and stock market reforms needed.

China: Currency contortions threaten dim sum
February 2016
renminbi contortion-R-600
Gap between onshore and offshore exposed; Hong Kong dim sum market in doubt.

Against the tide: China’s bumpy ride
February 2016
Chinese dragon-R-600
Stock markets dropped sharply at the beginning of this year, driven by the apparently accelerating slowdown in the Chinese economy and the slide in the Chinese renminbi. 

Economists sombre on China monetary trap
December 2015
Dollar dominance continues; RMB inclusion in IMF reserve basket symbolic.

China's international payment system gathers steam
November 2015
One month in and it’s a case of so far so good for the China International Payment System (CIPS), even allowing for limitations in operating hours.

Chinese corporates reassess FX hedging
November 2015
Renminbi overlap dollar-R-600

Having done well from their exposure to the RMB during the past decade, the currency’s surprise devaluation in mid-August should force Chinese companies to brush up on hedging strategies that were rusty at best, but many are instead simply focusing on opportunistic borrowing strategies.

China's balancing act on exchange rate

October 2015
China's quarter-point rate cut last Friday is the latest attempt to revive a flagging economy. But although currency liberalization is on the agenda in the longer term, the People's Bank of China is unlikely to be ready to cede control of the renminbi’s de facto dollar peg just yet as depreciation pressures grow.

RMB: ParFX offers USD/CNH trading
October 2015


RMB dollar glasses-R-600

Offshore renminbi has passed another milestone, becoming the first non-CLS settled currency to be tradeable on ParFX – but China’s regime of exchange-rate controls still casts a long shadow over the market’s infrastructure.


Brics take the road less travelled
September 2015

brics_road-600

Emerging markets are working for a multipolar monetary world. Beijing is spearheading the push to establish rivals to the World Bank to globalize the renminbi, establish markets for its excess capacity and plug the infrastructure deficit. But, for now, a post-Bretton Woods era is fantasy.

Asia’s corporates mature and refine treasury
September 2015
"The relevance of RMB has grown over the past four years from the trade settlement perspective. It will start to eat into the market share of other currencies."

Markets mull RMB devaluation and Fed policy link
August 2015

Janet Yellen time-R-600 

China’s shock RMB devaluation is unlikely to influence the Federal Reserve’s decision to hike, or otherwise, in September, but it could shape the path of subsequent increases, say analysts.

China: Stock meltdown prompts market intervention
August 2015
Foreign investors pull Rmb40.5 billion in two weeks; average P/E ratio still 66 times.

Markets adjust to new RMB normal
August 2015
Analysts foresee a surge in corporate FX hedging activity, onshore and offshore RMB spreads to normalize, and a dip in dim sum issuance after the RMB’s shock adjustment.

China stuns markets with sudden currency devaluation
August 2015
Everyone knew a revaluation of renminbi was coming sooner or later, yet China's announcement, including reform of the dollar fixing mechanism, caught many off guard. The move left observers debating whether it was stimulating its economy or acquiescing to calls for exchange-rate liberalization.

Inside investment: Rights and responsibilities of the renminbi
July 2015
China’s bid to join the currencies in the IMF’s SDR basket is more than a footnote of interest only to economists. Policymakers should take note.

Interdealer brokers: IDBs bet on RMB boom
July 2015
Renminbi internationalization a big opportunity; commodities counterbalance bank retreat.

Dim sum bond issuance slumps as renminbi globalization struggles to gain traction
June 2015
Recent data suggest that the momentum of the renminbi is slowing, particularly outside Asia.

 firecrackers column

RMB usage hampered by expertise, liquidity deficit
April 2015
The internationalization of the renminbi could be further turbo-charged if knowledge and liquidity concerns were addressed, according to a new study on corporates' views of the Chinese currency.

RMB depreciation expectations shift trading strategies
March 2015
As China gradually loosens its grip on its FX regime, an ostensibly overvalued RMB is expected to fall back in line with global currencies, presenting a range of opportunities for traders, ranging from USD/CNH spot positions and the options market, to punts on the CNY-CNH differential.

Stronger RMB, stronger China
March 2015
China’s currency might look overvalued, but that is only half the story.

RMB: Banks staff up to match rise of Chinese currency
February 2015
The need of banks to raise awareness and staffing levels around the renminbi within their own organizations looks set to be key as the battle for business heats up.

Rising dollar makes renminbi second-most overvalued currency
February 2015
What goes up must come down, even the renminbi. Having appreciated by more than 30% since 2008 against a trade-weighted basket, there is growing consensus that 2015 will see further falls in the Chinese currency.

Trade finance: RMB expansion catches up with China GDP
February 2015
Capital controls have constrained the use of the renminbi in global trade, while China’s real economy has surged ahead. Despite the strict rules around its use, market players are punting on strong RMB growth in 2015, Euromoney’s Trade Finance survey reveals.

Challenger banks and RMB to shape year ahead
January 2015
The continued internationalization of China’s currency and the emergence of challenger banks is set to define transaction banking in 2015.

Rise of RMB trading shows little sign of slowing in 2015
December 2014
Despite depreciation risk next year, amid the global currency war, market players say the battle between RMB offshore financial hubs and trading volumes will go from strength to strength.

Hong Kong-Shanghai Stock Connect enables CNH funding arbitrage
December 2014
The Hong Kong-Shanghai Stock Connect, which was launched amid much fanfare on November 17, has triggered a jump in CNH-funded arbitrage opportunities. However, rising Stock Connect volumes and easing by the People’s Bank of China – triggering a convergence between onshore and offshore rates – will remove current funding advantages.

South Korea battling for RMB spoils
October 2014
Backed by its robust trading relationship with China, the east Asian nation is the latest fledgling offshore renminbi hub. Market participants shed light on South Korea’s renminbi bid as internationalization of the Chinese currency gathers pace.

IFC plans offshore RMB duration play
October 2014
Buoyed by its Indian success, the World Bank’s private-sector arm the International Finance Corporation (IFC) has set its sights on further extending the offshore renminbi curve.

RMB: China vs the world
July 2014
The prospect of fierce competition between Chinese and western banks for international RMB business strengthens.

Pulse Survey: Renminbi’s internationalization continues apace
July 2014
When it comes to the difficulties in liquidity management faced by treasurers operating in China, 21.3% say renminbi cash-pooling is top of the list of issues.

Percentage of cross-border trade settled in RMB 

Percentage of cross-border trade settled in RMB
Source: Euromoney Research Group

RMB-sterling trading gets off to a flying start
June 2014
Bankers are already seeing demand for direct renminbi-sterling deals, and anticipate a rise in volumes and market makers, since the announcement on Thursday it is now possible to directly trade these two currencies in China’s onshore interbank foreign-exchange market.

Corporates take cautious stance on RMB adoption
June 2014
While renminbi trade flows between mainland China and emerging markets continue to grow, many domestic and western corporates remain reluctant to trade in the Chinese currency.

Transaction services guide 2014: Redback rising
June 2014
The renminbi’s meteoric rise as a payments and trade currency has brought it closer to becoming mainstream than ever before. Precisely when this will happen is anyone’s guess. That it will is inevitable.

World payment currencies vs. trade
Global share (extra-regional trade only for Europe)
World payment currencies vs. trade 
Source: WTO, Swift, Standard Chartered Research

RMB to be a top-five payments and trade currency in three years – ICBC
May 2014
The renminbi has risen dramatically as a world payments and trade-settlement currency in the past three years. According to the Chinese bank ICBC, it could become a mainstream international currency as soon as 2017.

RMB two-way volatility a key hedging challenge
May 2014
Damian Glendinning, Singapore-based group Treasurer at PC maker Lenovo, sees two-way volatility in the renminbi (RMB) as a key hedging challenge for the company, and for the market, in the coming period.

Eurozone’s first RMB clearing hub in Frankfurt faces London competition
April 2014
Though Germany lacks sizeable RMB deposits and liquidity, Frankfurt is well-positioned to intermediate trading flows between China and the eurozone, but it lacks London’s financial depth.

Capital controls in China are broken; Beijing faces a new 'impossible trinity'
April 2014
The sharp jump in cross-border lending to China in recent years means capital controls are de facto broken. As a result, Beijing faces the “impossible trinity” – an inability to manage exchange rates, monetary policy and allow for free movement of capital, all at the same time. China faces an renminbi-policy crisis just as much as a potential credit crisis.

Battle for European RMB trading hub supremacy intensifies
April 2014
Competition among European financial centres to be the main renminbi trading hub is intensifying after the Bundesbank and Bank of England struck agreements with China to clear and settle payments in the currency.

Decline of yuan-way bets triggers financial stability fears

March 2014
The longstanding one-way bet on USDCNY has been in disarray, but worse might be to come, as China looks to its FX regime to cope with credit issues, and likely defaults this year, threatening volatility in the structured-product market.



Jury out on renminbi trading band
February 2014
A shock policy-driven fall in the onshore spot rate has ignited speculation that a widening of the exchange-rate band is on the cards, while others are unsure the 'two-way' volatility presages a structural shift.

Transaction banks step up to multinationals' RMB liquidity challenge

February 2014
Deutsche Bank has become the latest bank after Citi and HSBC to launch a service enabling the movement of renminbi-denominated cash between onshore and offshore accounts, crucially boosting companies’ liquidity in the currency.

Offshore renminbi: Bank of China CEO gives London edge over Luxembourg
February 2014
CEO’s endorsement big boost to the City; renminbi bond issuance globally at record levels.



International renminbi update: Luxembourg 1, London 1
February 2014
London and Luxembourg are at loggerheads to become Europe’s leading offshore renminbi hub – although they wouldn’t let you know it.

Market is bullish on renminbi internationalization amid China wobbles
January 2014
Concrete advances towards the full tradability of the Chinese currency are at last seemingly being made, helping to rebalance the country’s growth model but heaping on short-term risks to China’s economic and financial stability.

London the offshore renminbi centre of choice in west, says Bank of China
January 2014
As competition between financial hubs heats up, London’s ambition to become the western destination of choice for offshore renminbi received a boost from crucial market players this week, following a flurry of successful renminbi-related developments in the City.

The stock market impact of China’s reforms
January 2014
The country faces many problems in banking, real estate, consumption and demographics that cannot be quickly solved.

Renminbi offers bright spot amid global trade finance slump
December 2013
The renminbi’s impressive rise this year as a global trade finance currency is a positive development for a critical market that has been buffeted hard in recent years by limp demand and financial regulation.

London-China ties strengthen as China Construction Bank touts UK business
December 2013
With extended opportunities for UK investors in China through programmes such as the RQFII scheme, China Construction Bank opened its doors this week to London-based investors, signalling the strength of the Sino-UK relationship.

Renminbi second only to dollar in trade finance
December 2013
The renminbi has overtaken the euro to become the second most-used currency in trade finance, according to Swift, the financial messaging service.

 Renminbi as world trade finance currency in value 

China’s crucial Shanghai trade
December 2013
At its Third Plenum, the Communist Party communicated its commitment to economic change. The country’s first free trade zone, in Shanghai, will act as the test bed, but without clarity on any number of policies, will international firms rush to set up shop?

Four challenges facing Shanghai free-trade zone
November 2013
China’s ambitious liberalization experiment in Shanghai, announced at the third plenum, could reshape national policy – but there are four key challenges that could thwart the project.

FX investors should look east; China could taper before the Fed
November 2013
For all the focus on the Federal Reserve’s plans to start tapering its asset purchases, currency investors should also be looking at developments in China.

China’s latest swap agreement will facilitate trade
November 2013
Swap agreement reflects growing trade; London has competitive advantage.

US Treasury renminbi undervaluation claim disputed

October 2013
The US government has upped the ante in its criticism of China’s foreign exchange regime, but Lombard Street Research reckons the renminbi is, in fact, overvalued by 30% on a trade-weighted basis, citing, in part, rising unit labour costs and disinflationary pressures.

Cash management: A revolution in cash for China
October 2013
Demand for sophisticated cash management services in China is rising as the authorities press for greater business efficiency at home and Chinese corporates expand their foreign operations. Renminbi liberalization is another driver.

International RMB: Luxembourg 1 Rest of Europe 0
October 2013
London should be wary of the Duchy’s ambitions to become Europe’s RMB hub.

Foreign investors wary of China onshore risks

September 2013
The preferred method for playing Chinese credit markets remains the dim sum bond market, say analysts, as China’s expansion of access to its onshore market is met with a cool reception by foreign investors.

Emerging market FX growth underperforms broader market
September 2013
Emerging market (EM) currencies are expected to continue to expand their share of the $5.3 trillion-a-day global forex market despite the turmoil, with China’s RMB leading the charge.

China RMB debate: The renminbi’s road to full internationalization

July 2013
Euromoney’s debate involving leading executives in Asian financial services throws light on the Chinese currency’s progress to full international status and the likely developments that will hinder and advance the process.

Renminbi overvalued by 30%; China macro risks rise
July 2013
The appreciation of China’s renminbi in the face of deteriorating economic fundamentals and global disinflation represents a new normal in China’s political economy, but opinion is split about whether the currency is overvalued.

Currencies the best way to hedge against China crash
July 2013
Investors looking to insure against the probability of a hard landing in China should look to the currency market.

China: People’s Bank stays firm to calm fears
July 2013
Funding squeeze reaches peak; PBoC to safeguard stability.

London underlines offshore RMB credentials
June 2013
London’s role in the global RMB market grew substantially last year, with business volumes and the number of renminbi products provided by London-based banks on the up, according to a new report.

China’s FX carry trade: the next shoe to drop?
June 2013
For FX investors witnessing the volatility in high-yielding currencies, it might seem a strange time to warn about the potential bursting of a carry trade bubble, but one has managed to slip under the radar.

US falls behind the curve as China pushes forth with internationalization of the RMB
June 2013

Fully convertible RMB: the final frontier
May 2013

Renminbi takes off as trading currency
May 2013

China curbs on speculative inflows pave way for renminbi band widening
May 2013

European capitals scramble to arrange currency trade deals with China
May 2013

China FX liberalization to ease reserve headache; Beijing at point of no return
April 2013

China balances reserves against currency imperative
April 2013

Improved Taiwan-China relations spur investor confidence – Asia Q1 results
April 2013

Chinese banks: too big to compete
March 2013

Redback’s rocky rise: will China bite the monetary bullet?
February 2013

London steals a march on New York with Beijing swap agreement
February 2013

Renminbi a better focus of currency hostilities
February 2013

Nominal GDP targeting – a new method in the Chinese monetary policy madness?
February 2013

Renmimbi internationalization to turbo-charge Taiwan growth
February 2013

China: Cash management revolution under way
February 2013

Special focus: Currency wars
February 2013

Former People’s Bank of China adviser warns on China imbalances
January 2013

The renminbi and cross-border trade: sightings of Bigfoot
January 2013

China rebalancing: winds of change
January 2013

London ramps up its offshore renminbi bid
January 2013

Renminbi: Why not swap?
January 2013

Bond markets: LatAm dim sum whets Asian appetite
January 2013

UK policy hampers London’s RMB drive
December 2012

Lack of single benchmark hurting offshore RMB
November 2012

Sources: Bloomberg, TMA, ANZ

 


 

F is forward rate; S is spot rate; d is the number of calendar days for day count adjustment; t is tenor and t=0 is spot.

China Construction Bank's dim sum bond to spark new international bank issuance
November 2012

Renminbi internationalization remains on track despite cyclical drop in payments
November 2012

Start planning now for RMB internationalization
November 2012

Interest rates in China will be fully liberalized in three years – HSBC
November 2012

How to get your money out of China
November 2012

 China's government expands the role of the RMB

 
 Source: China Law and Practice

Inside investment: Nudging 1.3 billion Chinese
September 2012

Foreign exchange: Depreciation hampers renminbi
September 2012

Hong Kong: Chan outlines risk and reward for Hong Kong
September 2012

Taiwan agreement opens the gate for Chinese investment
September 2012 

Changing dynamics of RMB: Hedge depreciation via forward-forwards
August 2012

 Correlation of RMB to China composite

 

Depreciation fears hamper renminbi internationalization
August 2012

HKMA's Chan outlines risk and potential reward for HK

August 2012 

Value of RMB payments increases 17-fold
July 2014

 RMB payments grow 17.4 times

 
 Source: Swift

 


 

 Growing international adoption of RMB payments

 
 Source: Swift

People's Bank of China to keep renminbi flat to the dollar by year-end
July 2012

 Source: Capital Economics

You win sum, you lose sum
June 2012

RMB internationalization: From dim sum to a full Chinese banquet
June 2012

RMB internationalization: Who will win China's transaction banking business?
June 2012

London is the natural hub for renminbi
May 2012

Widen RMB trading band to 10% — ex-People's Bank of China advisor
May 2012

Markets hail Asian governments bond plan
May 2012

Hopes rise for Asia regional bond market
May 2012

China: Dim sum bond is offered first on London's menu
May 2012

China cash management debate: Banks in China simplify a complicated world
May 2012

Barclays: China could achieve capital-account liberalization by 2015
April 2012

Middle East: Emirates NBD prints Gulf's first dim sum bond
April 2012

Taipei angles for offshore RMB financial centre status
March 2012

Aussie's days as a China proxy may be numbered, warns HSBC
February 2012

Foreign Exchange: London seeks to be top renminbi trading centre
February 2012

Dim sum bond market shows signs of maturity
February 2012

Taiwan: Cross-strait banking plans to bear fruit
February 2012

Renminbi internationalization to continue in 2012
January 2012

Will UK/HK renminbi deal make a difference?
January 2012

London 'not ready' to be offshore market for China
January 2012

China: Investors lose appetite for dim sum
January 2012

CME adds renminbi to alternative collateral
December 2011

Hong Kong launches renminbi gold trading
November 2011

China cash management debate: The challenges of Chinese cash management
September 2011

CME Group to launch new RMB FX products
September 2011

BNP Paribas focuses on Asia as Renminbi deregulates further
September 2011

Deutsche Bank unveils massive expansion in China
September 2011

Zhou stays firm amid China’s challenges
September 2011

Foreign exchange: Is the Hong Kong peg to the dollar unsustainable?
September 2011

Foreign exchange: Offshore renminbi celebrates first anniversary
August 2011

Will China unhitch from dollar, internationalise renminbi?
July 2011

China: Dim sum fever leaves investors starving for yield
May 2011

Cash management debate: Dynamic Asia makes growing demands on cash management banks
April 2011

China starts onshore options market
March 2011

Asia's financial regulators bolster FX barriers
February 2011

World Bank taps dim sum
January 2011

Dim sum market is a side dish
January 2011

China: Government AMCs to become new conglomerates
November 2010

Renminbi comes to Africa
October 2010

Chinese reform: Renminbi moves to a sweeter spot
October 2010

Everything you always wanted to know about RMB but were afraid to ask
October 2010

A new bond market

October 2010

Chinese reform: Renminbi moves to a sweeter spot
October 2010

FX: Two sides of the renminbi coin
September 2010

Renminbi: Trading places
September 2010

Two steps towards internationalized renminbi
August 2010

Chinese central bank opens up bond market to foreign investment
August 2010

McDonalds serves up first RMB-denominated corporate bond issue
August 2010

Standard Chartered is on the road with Renminbi trade settlement
March 2010

Asia's local-currency boom is a Chinese story
June 2009

HKEx plans derivatives in renminbi and IT upgrade
March 2010

NPLs: China's trillion renminbi problem
January 2009