Advanced Search

The story appears on

Page A6

June 25, 2016

GET this page in PDF

Free for subscribers

View shopping cart

Related News

Home » Business » Finance

More nations include yuan in forex reserves

Source: Xinhua | June 25, 2016, Saturday | Print Edition

AS more countries have included the yuan into their official foreign reserves, the Chinese currency is becoming truly global and this is set to continue, a leading Chinese investment bank said in a report.

The Monetary Authority of Singapore said on Wednesday that it will include yuan investments as part of its official foreign reserves from this month.

“The move by MAS shows that the yuan’s SDR inclusion is not just symbolic,” China International Capital Corp said. As of May, MAS held US$244.5 billion in foreign exchange reserves, the 11th-largest reserve holdings globally. If it were to raise the yuan’s share to 5 percent, it will reallocate US$12.2 billion to yuan assets, the report said.

Data released by the International Monetary Fund showed that US$94 billion of official assets were already held in yuan at the end of 2014, accounting for 1.1 percent of global foreign exchange reserves.

“The increase of yuan holdings is likely to continue as more central banks set official targets for the yuan in their reserve pools, especially after the new SDR basket comes into effect,” the report noted.

As it plays an increasingly important role, the report estimated that the foreign demand for the yuan and yuan assets tends to grow, and the currency has the potential to rise to 3.7 percent in global foreign exchange reserves, translating to an inflow of 2.7 trillion yuan (US$408 billion) to China.

The IMF last year decided to add the yuan into its Special Drawing Rights currency basket, making it one of the five reserve currencies fully endorsed by the 188-member multilateral organization.

Experts have warned the global reserve currency status will not automatically turn the yuan into a major global reserve currency, which is a choice of the market.

If yuan wants to gain the trust and confidence of the market, China needs to become an economy and a financial system that can accept large and free movement of inflows and outflows and has depth and breadth with a variety of financial instruments, experts have said.

Direct trading for yuan and won

CHINA will allow direct trading between the yuan and the South Korean won on its inter-bank foreign exchange market from Monday.

The move will lower exchange costs, facilitate use of the two currencies in trade settlement and investment, and boost bilateral financial cooperation, the China Foreign Exchange Trade System said in a statement yesterday.

China and South Korea signed a free trade agreement in June 2015 after three years of talks. Under the deal, the two countries will slash tariffs on over 90 percent of traded goods within 20 years.

China is South Korea’s largest trading partner. Bilateral trade was US$240 billion in 2014 and is expected to reach US$300 billion this year.

Finance


 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend