Positive sentiment in returning to offshore renminbi markets: IFR Asia
27 May 2013
A sense of enthusiasm is returning to the offshore renminbi markets, according to capital markets magazine International Financing Review Asia (IFR Asia). With Singapore introducing renminbi clearing, the first foreign-exchange trades were being cleared locally, and DBS and HSBC were vying to be the first to offer locally settled renminbi bonds to the city state's investors.
Taiwan was a couple of steps ahead and cross-strait relations meant renminbi usage had been growing fast since the award of first licenses earlier this year. Banks in the city state were already taking advantage of the island's captive renminbi pools for their own funding.
London, too, was set for a pick up in renminbi business from the Bank of England's negotiations of a sterling/renminbi swap line with the People's Bank of Chinam which was set to emerge as the world's biggest so far, according to the magazine.
Following a quiet 2012, these were welcome changes and fears of a Chinese economic slowdown and uncertainty over the country's political succession distracted investors and policymakers alike, which left few headline developments of note.
The international rebound interest was meanwhile on the way with China again letting appreciation of its currency, which raised the question of whether the renewed enthusiasm was the result of further reforms and genuine trade flows or simply speculation on the currency.
Meanwhile, New Zealand and China are in discussion about making their currencies directly convertible, a step that would see cost reduction with trade between the two countries targeted to surge 33 per cent over the next two years.
New Zealand prime minister John Key's visit to China last month, set the stage for the talks according his spokeswoman Lesley Hamilton who spoke over telephone said over telephone yesterday, confirming an earlier report in The Wall Street Journal, Bloomberg reported. She said, the negotiations were in an early stage and were progressing without a specific timeframe.
China's yuan was the 13th most-used currency in global payments in April, According to the Society for Worldwide Interbank Financial Telecommunication, China's yuan was the 13th most-used currency in global payments in April.
New Zealand's exports to China were up 32 per cent in the first quarter, overtaking shipments to Australia for the first time, led by dairy products, logs and meat. The currency talks were ongoing as New Zealand targeted $20 billion (US$16.2 billion) in two-way annual trade with China by 2015 from about $15.2 billion in the year ended March.
New Zealand's sales to China stood at $2.31 billion in the three months ended 31 March, according to a report dated 26 April by Statistics New Zealand. Exports to Australia were down 7.3 per cent to $2.17 billion, the lowest after early 2008 and the first calendar quarter it stood behind China.
