China central bank officials see bigger global role for yuan as US dollar wanes
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Ding Zhijie, head of a research centre at the State Administration of Foreign Exchange, said the yuan had become a sought-after asset for global investors seeking stability and absolute returns as government bonds denominated in the US dollar, yen and euro offered little, or even negative, yields.
“Whether you look at interest rates or exchange rates, yuan assets have clear advantages now [against assets denominated in other currencies],” Ding said on Saturday at the Understanding China Conference in the southern city of Guangzhou, an event hosted by China to promote the country’s global influence.
China’s five-year government bonds still offer an annual yield over 3 per cent while US government debt of the same maturity offers only 0.4 per cent and the yield on German bonds is a negative rate of about 0.8 per cent.
In addition, China’s quick economic recovery from the coronavirus has helped the yuan to appreciate to a two-year high against the US dollar, despite the central bank’s efforts to slow the appreciation.
Ding’s optimistic message reflected Beijing’s fresh confidence that the yuan, despite its inconvertibility under the capital account, will play an increasingly important role on the international stage to indirectly undermine the anchor role of the US dollar.