Society: Extend the RMB trading time of China to the US dollar Huaxiong

Source: Bloomberg

Author: Maria Elena Vizcowno

China ’s expansion of the latest measures for the RMB market in the shore show that, on the occasion of weakening the dominant position of the US dollar, Beijing will firmly enhance the global attractiveness of the RMB.

In order to promote the international use of the RMB, China has extended the trading time on the shore this week.It is true that this is just a small step, but China has previously adopted measures to promote energy and commodity exports in the transactions, and some data show that RMB trading activities have grown rapidly.

In the first half of last year, the strengthening of the US dollar and the action of imposing sanctions on Russia as a weapon, providing new impetus for some large world's exploration methods to bypass U.S. currencies.Although no one means that the US dollar will soon lose the dominant position as the main trading medium, the attempts to go to the US dollar are increasing.

The market is open for a long time on the agenda of the Chinese government, but from Taiwan and Russia to semiconductor technology and trade, the intensification of tensions in all aspects may bring extra urgency to Beijing's leaders.

Beijing is trying to maintain the status of RMB as an international currency in order to deal with recent geopolitical tensions and hostile emotions, especially in the United States, Stephen Jen, CEO of the London hedge fund Eurizon Slj Capital.

Xi Jinping was again elected as the General Secretary of the Mainland Government's Central Committee last year. It also provided a more solid platform for further promoting market policies. However, concerns about China ’s concerns from the opening of epidemic prevention to the opening of epidemic prevention may exacerbate challenges.

China will extend from 23:30 Beijing time to 3 am the next day this week.This time has continued until the evening of European time and the afternoon of the United States.

Given that only a few Chinese banks have the ability to stabilize the new time period transactions, the market response is plain.According to data from the foreign exchange trading center, within the three and a half hours of the newly added on Tuesday, 16 institutions including Chinese capital banks, joint -stock banks, and foreign banks reached a total of US $ 128 million, accounting for about the whole day0.4%of the transaction volume.

However, this change, coupled with other measures such as RMB in commodity transactions, may help promote the use of RMB.Compared with most major currencies, the management of RMB is stricter.

Brown Brothers Harriman & CO. Win Thin, a global director of foreign exchange strategy in New York, said that the extension of trading time will make it easier for foreigners to do business with China.He also asked people to pay attention to investment in China.

For example, the data shows that the multinational funds have been reduced for 10 months to reduce the holding of RMB for the Treasury bonds for 10 consecutive months. China may have the first net outflow of funds since the relevant data records in 2013.

RMB transactions are divided into offshore and on the shore market.For most international traders, the offshore market is more important and has made a long -term growth in recent years.The offshore market is traded throughout the weather and will not be controlled by China.The latest measures focus on the shore market.

The latest three -year -old foreign exchange transaction survey released by the International Clearance Bank (BIS) shows that the overall growth of the RMB in the 39 currency categories tracked is the fastest.The increase of more than 70%.The growth of turnover is mainly driven by the transactions between opponents outside China. It has doubled from 2019 to 2022, accounting for about 80%of all RMB transactions.

However, the RMB transaction volume is still relatively low compared to China's economic scale, about 3%of the GDP of the whole year, while the US dollar is 30%of GDP, and the median value of emerging market currencies is 6%.BIS's other survey last year showed that in 2022, the RMB transaction volume accounted for 7%of all foreign exchange transactions, becoming the fifth largest trading currency; the US dollar accounted for 88%.

At the same time, China is also promoting the use of RMB in transactions with major energy and commodity export countries.Russia has doubled its US $ 186.5 billion (approximately $ 250.6 billion) National Welfare Fund to double the proportion of RMB funds to 60%.After the influence of the Ukrainian war led many other customers to cut off the relationship with Russia, Russia tilted more energy sales to China.As Xi Jinping's visit to Riya was able to enhance relations between the two countries, China also signed about $ 50 billion in investment agreements with Saudi Arabia last month.

Victor Xing, the person in charge of Kekselias Inc., said that extending the RMB trading time will help promote such transactions with Russia and Saudi Arabia.

After China announced the extension of the transaction time, the RMB rose to the fourth month of four months.After China's transformation of epidemic prevention policies, as international investors bet on the recovery of China's economy, the yuan has strengthened since November.

This is a positive signal that China is reopening to other parts of the world, saying that Wells Foreign Exchange strategist Brendan McKenna said.This shows that China wants to further integrate into the global financial market.