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Renminbi use surges in home of US dollar

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James Kynge
Financial Times
June 5, 2014

It is the monetary equivalent of what Chairman Mao called “bombarding the headquarters”. China’s renminbi is rapidly displacing the US dollar as a trading currency not only in Asia and Europe but now also in the US home market.

The value of renminbi payments between the US and the rest of the world rose by 327 per cent in April this year from the same month a year ago (see chart) as more US corporations switched to using the Chinese currency to pay for imports from China, according to data from SWIFT, the international currency settlement firm.

The reasons driving the upsurge are structural and long-term, said Debra Lodge, a managing director at HSBC in New York.

First, US importers can slash the cost of imports from China by agreeing to trade in renminbi rather than US dollars, Lodge said. Second, a recent surge in the popularity of a host of renminbi-denominated financial market instruments are making it easier for US corporates both to hedge currency risk and to earn an investment return from the renminbi they hold.

Renminbi use surges in home of US dollar rmb trade currency e1401869398285

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This article was posted: Thursday, June 5, 2014 at 5:02 am





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