Renminbi continues long march towards internationalisation

Bankers see the Chinese renminbi or yuan becoming a key commodities currency.

This scenario, however, depends on China pursues its policy of gradually freeing up trade in the currency, said bankers who met at a Financial Times commodities conference in Switzerland recently.

Currently, the renminbi is not convertible for purely financial purposes unrelated to trade and investment.

Bankers expect the renminbi to be used more and more to settle contracts into China and eventually as the basis for commodities trading in Asia. The turn to the renminbi could take place within the next 10 to 20 years.

China has been aggressive in pushing the renminbi as an international currency over the past two years. Earlier this month, China emphasized its intention to keep liberalising its currency regime by doubling the renminbi’s daily trading band to 1%.

Beijing has also allowed exports and imports to be settled in its currency, and a growng renmnbi deposit market is developing in Hong Kong.