• 4 minutes 2nd Annual Great Oil Price Prediction Challenge of 2019
  • 7 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 10 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 13 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 12 hours The 5 Scary New Rules Of Upside-Down Capitalism
  • 2 hours U.S. Shale To Break Records Despite Bearish Rhetoric
  • 1 hour Winter Storms Hitting Continental US
  • 7 hours Hydrogen Hurdles in Japan
  • 21 hours More dumbed down? re Hong Kong Act of Congress
  • 14 hours Conoco next gen test wells Vintage 5 (V5) 20% recovery and say " We can do even better "
  • 13 hours PennEast Appealing Wacky 3rd Circuit Decision to Supreme Court
  • 1 day U.S. Shale Output may Start Dropping Next Year
  • 11 hours Aramco IPO magic trick
  • 23 hours Petroleum Industry Domain Names
  • 16 hours Impeachment S**te
  • 14 hours Contaminated Oil
  • 14 hours NATGAS, LNG, Technology, benefits etc , cleaner global energy fuel
  • 1 day Crazy Stories From Round The World
  • 14 hours Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
Stuart Burns

Stuart Burns

Stuart is a writer for MetalMiner who operate the largest metals-related media site in the US according to third party ranking sites. With a preemptive…

More Info

Premium Content

China still Hopes its Renminbi will become the Favoured Global Currency

A while back there was a lot of talk about how the Chinese renminbi or yuan was going to take over from the US dollar as a global currency – this was around the time projections were being made about how China was going to overtake the US as the largest economy in the world by 2040 or some such date.

Well, as growth has slowed, such claims are not heard so frequently anymore, even though the economy continues to grow at a decent and more sustainable lick than it was a couple of years ago.

The role of the renminbi, though, has been quietly evolving and China has been pursuing a number of avenues to boost the currency’s acceptance ahead of full convertibility, which is likely still a few years off.

One project has been to sign up other trading partners, some 20 to date, for currency swap deals.

Singapore, South Korea, several Middle Eastern oil and gas producers, and Brazil have all signed up to deals allowing the trading partner’s central bank to supply local financial institutions with renminbi for use in settlement on purchases from China.

For many of these countries, of course, their sales to China may be much greater than their purchases from China, so there are limitations to how far this can grow; but HSBC is expecting the reminbi to become a top three global trade currency behind the dollar and the euro by 2015.

Related article: A US$ Retreat Could Ignite The Precious Metals Market

This week, China has signed an agreement to start direct currency trading with Australia, making the Aussie only the third currency to be traded directly with the renminbi after the dollar and the yen.

For Australia, though, it is an important step, according to the FT. China is Australia’s biggest trading partner and buys more than a quarter of the country’s exports, mainly in the form of natural resources – including coal and iron ore.

Australia is the fifth-biggest source of goods bound for China, responsible for almost 5 percent of China’s total imports in 2011-12, according to Australia’s department of trade.

The move – China starting direct currency trading with Australia – will allow the pricing and sale of goods priced in renminbi rather than US or Australian dollars, and while it is not going to have a major impact in the near term, it is evidence of China’s intent to push pricing of commodities in their own currency.

As if to underline how seriously financial centers around the world are taking the rise of the redback (as the renminbi is sometimes known), countries are vying for the right to trade, hedge and transact renminbi currency dealing.

Singapore and Taipei are said the be keen to build on their position following earlier currency swap deals, and France sent a delegation to Hong Kong last month keen to persuade China that Paris could become a trading hub for the currency in Europe. Not to be outdone, the UK’s Treasury hosted a forum on trading the renminbi and is said to currently be the front-runner to join Hong Kong as a trading hub for the currency.

Related article: Could Bolivia Become the New Saudi Arabia of the Lithium Industry?

This would potentially create a lot of jobs in the financial sector as the currency approaches full convertibility in gradual steps over the next few years.

Liberalizing China’s currency system would remove the costs of Chinese companies having to transact via dollar or euros and make Chinese companies more efficient in international trade. The process of full convertibility could take five years, but while the timeframe is unclear, the direction is unmistakable.

China has aspirations for Shanghai to rank alongside New York and London as a global financial center dealing in its own currency, and that won’t happen without the currency becoming fully convertible.

By. Stuart Burns




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play