For nearly 50 years, most of the world’s oil has been bought and sold with US dollars. But that may be changing, as the energy exchange center in Shanghai has begun trading a yuan-denominated oil futures contract. Six months after the contract, more 10% of the world’s oil is now traded in yuan. Why are the Shanghai contracts so popular? Will the world enter a petrol-yuan era from petrol-dollar era? How will the situation evolve against the background of trade war between the two largest economies?
After meeting with Chinese President Xi Jinping this year, Donald Trump backtracked and dropped his accusation of China being a currency manipulator. But the issue of currency manipulation is still debatable. The RMB is certainly not a free-floating currency and the controls are complex. China’s central bank sets the daily rate with movements only allowed in a narrow 2% band. This did not change for years, until August 2015 when the central bank reformed a bit by beginning to set the daily RMB rates based on the closing value of the previous day’s interbank forex market. But it’s not considered a major change and the way to achieve a more open currency remains difficult.
PBOC’s move to devaluing the RMB didn’t just follow weak exports data, but also IMF requirements for more market-driven exchange rates.
Is the yuan devaluation the start of a currency war, or a reflection of Beijing’s plan to give the market more power?
The RMB exchange rate is caught between two powerful forces: the surging Dollar and China’s rising power.
This week, China’s central bank finally bit the bullet and cut the required reserve ratio by 50 basis points; and the manufacturing purchasing managers’ index hit a new low
As the global economy looks to emerging markets for growth, investors rush in for the high yields of emerging market bonds. But what about the risks?
This week, the HSBC PMI showed an uptick in China’s manufacturing activity; news of the possibility of an RMB clearing house in Toronto made waves; and Alibaba posted strong second quarter results.
Michael Brennan, a renowned academic in finance, on the variable interest entity structure, China’s capital markets and the internationalization of the renminbi.
This week, there was fresh debate over whether China will overtake the US to become the largest economy in the world this year, the RMB inched one step closer to true internationalization, and all eyes were on Hong Kong to gauge the impact of the Occupy Central protests on the economy.