Renminbi has ‘huge’ room to grow as more Chinese firms expand overseas: StanChart
But currency is unlikely to challenge the US dollar’s dominant position soon, say lender’s executives
The renminbi (RMB) is set to expand its presence in global trade and finance as more Chinese companies venture overseas, according to executives at Standard Chartered (StanChart). While the currency is unlikely to challenge the US dollar's dominance in the near future, it could catch up to other currencies like the yen and the pound, says Jean Lu, CEO and executive vice-chair for China at the bank.
Lu, together with Patrick Lee, the bank's CEO for Singapore, Asean, and South Asia, discussed the bank's potential in tapping the connection between China and Asean during the Asia New Vision Forum by Caixin Global. Over 50% of Chinese cross-border receipts and payments for trade and investment flows already use RMB as a settlement currency, and improved infrastructure makes it more feasible for RMB settlement today.
However, limited liquidity in offshore RMB markets remains a constraint, which could hinder its growth compared to other dominant currencies. Nonetheless, Lu believes that China's policymakers are working towards internationalizing the RMB by pouring liquidity into offshore markets, and the currency's adoption will ultimately be driven by commercial factors such as liquidity, infrastructure, and supportive policies.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
