BEIJING: “It does take time to cultivate a new investor base”, said Ngan of China Everbright. China Agricultural Bank is also selling dual currency bonds denominated in the yuan and the dollar in London. Britain and China agreed to a series of initiatives in September ranging from an expanded currency swap agreement to Chinese investment in British nuclear power and a feasibility study for a scheme to connect the London and Shanghai stock markets.
“By marketing the renminbi as a trade currency, China has used its trade strength to integrate the renminbi into the global financial system”.
The potential extension of trading hours is “very positive for the offshore market as it provides stability with a clearer reference from onshore”, said Robert Minikin, head of Asia FX strategy at Standard Chartered Plc.in London. This will be the first time that renminbi-denominated Chinese sovereign debt will be available outside of Chinese borders, opening up an worldwide renminbi debt market.
“I’d like to see much more capital account convertibility before it becomes a reserve currency”, Gupte said on the panel at Sibos, a conference put on by SWIFT. This trend is set to grow in particular through initiatives such as China’s One Belt One Road policy, which has large amounts of infrastructure investments in countries that connect China’s trade with the West.
The issue of renminbi bonds onshore by foreign borrowers is known as Panda bonds. IFC is also planning to sell green Panda bonds. PBoC plans to first launch short-term debt, which would act as a foundation for the launch of Chinese treasury bonds in renminbi in London, the Financial Times reported.
The bank credit was the highest on record for the month of September.
China’s foreign exchange reserves – the biggest in the world – stood at US$3.51 trillion at the end of September, down from US$3.56 trillion a month ago, according to the central bank.
Data on October 19 is expected to show China’s economic growth slowed to 6.8% in the third-quarter, the weakest since the global financial crisis, putting pressure on policymakers to roll out more support measures as fears of a dramatic slowdown spook investors. Without the yuan included in the basket, it would be hard for China to provide the resources.
