The global foreign exchange (forex) market has ballooned in recent decades as more and more economies liberalise their capital accounts.
Some 24 Hong Kong-listed companies apply for permission for their shares to be traded in both yuan and Hong Kong dollar currencies, which would spur the yuan internationalisation campaign and consolidate the city’s status as a leading offshore yuan hub.
VTB Bank’s Andrey Kostin warns that ‘it’s very dangerous to rely on America’, after Russia’s second-largest lender lost billions last year upon being cut off from the US dollar and euro.
With sights set on a free-trade agreement, Uruguay is trying to expand and diversify its exports to China, and the Uruguayan consul general in Guangzhou says free currency trade is essential.
The Federal Reserve’s policy tightening and the recent banking-sector crisis are weighing on the US economy, which is staring at a possible recession in 2024, Daniel Ivascyn, Pimco’s CIO, tells the Post.
After the Chinese currency’s recent weakening below 7 to the US dollar, foreign-exchange regulators say they will guide expectations, correct behaviours and curb speculation.
China has long been keen to promote the yuan overseas, as well as reducing its reliance on the US dollar, with the likes of Russia, Brazil and Bangladesh increasing their use of the currency.
China is ramping up efforts to boost the yuan’s appeal as an alternative in trade and as a reserve currency in the face of US dollar hegemony, while countries from South America to the Middle East have got on board with increased yuan use.
China has reduced its holdings of US Treasury bonds, which would lose value if the United States retained its debt ceiling.
Some 87 per cent of 331 respondents in a survey expect the Federal Reserve to cut interest rates to 3 per cent or below starting from this year.
Bangladesh and Russia agreed to use the yuan to settle payment for a nuclear plant amid Beijing’s efforts to increase the use of the Chinese currency overseas and decrease reliance on the US dollar.
Lu Lei, deputy head of the State Administration of Foreign Exchange, says technology like ChatGPT, an AI chatbot, could be used to study financial issues and inform monetary policy.
An increase in yuan settlements with the largest South American country shows how Beijing is trying to prevent China from being financially strangled amid US decoupling.
The CME options have a range of expiry dates and are based on futures contracts with a notional amount of US$100,000, but volume may take time to pick up traders say.
Prominent Chinese economist says banking authorities should implement a progressive tax on cross-border capital flows to guard against external risks that can slow the pace of financial liberalisation.
Russia’s economy has been hit by Western sanctions, resulting in an increased use of the yuan as part of a surge in trade, but analysts said it will not help significantly internationlise the use of the currency.
China and others could see lower levels of investment inflows in the near future, global finance body says, as the market turns “more cautious” because of aggressive moves by the US and EU central banks.
Central bank deputy governor Pan Gongsheng said that as China’s economy recovers and the interest rate differential with the US stabilises, the yuan’s role as a safe-haven asset will become more prominent.
A further straining of relations between the United States and China threatens far-reaching implications for global trade that leaders on both sides are trying to guard against.