Renminbi rolls out
Published: January 16 2011 19:33 | Last updated: January 16 2011 19:33It is not yet a flood, but the trickles eroding the walls that keep China’s currency within the country’s territory are beginning to add up to something.
Already last year, the renminbi debuted as a currency for bond financing by multinational corporations (McDonald’s); trade credits (to an Indonesian group by the Industrial and Commercial Bank of China); and offshore deposit accounts (to the Bank of China’s personal banking clients in London, New York and other cities).
Last week, further holes were pierced in the dam of non-convertibility. Pharo Management, a hedge fund manager, announced it will offer renminbi-denominated shares in its funds. The city of Wenzhou launched a pilot project to lighten restrictions on its residents’ ability to invest money offshore. And a year and a half after Chinese corporations were allowed to settle cross-border trades in their own currency, permission has also been granted to use renminbi to acquire or found new operations overseas.
That many of these moves make it easier to ship renminbi out of the country does not change the redback’s natural and favoured direction. If Chinese authorities were relaxing restrictions on capital inflows as freely as on outflows, the renminbi would have appreciated by more than the 3.5 per cent it has risen against the dollar since last year.
Read more on FT.com / China - Renminbi rolls out
Already last year, the renminbi debuted as a currency for bond financing by multinational corporations (McDonald’s); trade credits (to an Indonesian group by the Industrial and Commercial Bank of China); and offshore deposit accounts (to the Bank of China’s personal banking clients in London, New York and other cities).
Last week, further holes were pierced in the dam of non-convertibility. Pharo Management, a hedge fund manager, announced it will offer renminbi-denominated shares in its funds. The city of Wenzhou launched a pilot project to lighten restrictions on its residents’ ability to invest money offshore. And a year and a half after Chinese corporations were allowed to settle cross-border trades in their own currency, permission has also been granted to use renminbi to acquire or found new operations overseas.
That many of these moves make it easier to ship renminbi out of the country does not change the redback’s natural and favoured direction. If Chinese authorities were relaxing restrictions on capital inflows as freely as on outflows, the renminbi would have appreciated by more than the 3.5 per cent it has risen against the dollar since last year.
Read more on FT.com / China - Renminbi rolls out
Copyright The Financial Times Limited 2011.
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