Against the Cur­rent

The in­ter­na­tion­al­iza­tion of the ren­minbi pro­gresses amid ex­change rate fluc­tu­a­tions

Beijing Review - - BUSINESS - By Zhang Shasha

When the United States an­nounced that it will im­pose an ad­di­tional 10-per­cent tar­iff on $200 bil­lion worth of Chi­nese prod­ucts ef­fec­tive on Septem­ber 24, the news fur­ther stirred the Chi­nese ex­change rate mar­ket as 2018 has wit­nessed the ebb and flow of the ren­minbi ex­change rate.

The yuan has de­pre­ci­ated by nearly 7 per­cent since mid-june, when the United States first made the new tar­iff threat, a sig­nal of es­ca­lat­ing Sino-u.s. trade ten­sions.

How­ever, ac­cord­ing to data re­leased by the So­ci­ety for World­wide In­ter­bank Fi­nan­cial Telecom­mu­ni­ca­tion (SWIFT) in Au­gust, the ren­minbi re­mained the fifth most ac­tive pay­ment cur­rency in July, amount­ing to 2.04 per­cent of all pay­ments, up 0.43 per­cent­age points from June. In ad­di­tion, the value of ren­minbi pay­ments went up by 9.91 per­cent, while other pay­ment cur­ren­cies de­creased by 2.5 per­cent on av­er­age month on month.

To­day’s sit­u­a­tion dif­fers from the de­val­u­a­tion that took place in 2016 when the yuan’s in­ter­na­tional pay­ment value de­clined as much as 29.5 per­cent com­pared to 2015, clos­ing out the year in sixth place among cur­ren­cies used for in­ter­na­tional pay­ments.

As far as the in­ter­na­tion­al­iza­tion of the yuan is con­cerned, the im­pact of this year’s ex­change rate fluc­tu­a­tions is not as sig­nif­i­cant as 2016 be­cause it is af­fected by both ex­ter­nal and in­ter­nal el­e­ments.

“The in­ter­na­tion­al­iza­tion of the ren­minbi is a con­ver­gence of mul­ti­ple el­e­ments, and the ex­change rate is just one of them,” Sun Jie, a re­searcher with the In­sti­tute of World Eco­nom­ics and Pol­i­tics un­der the Chi­nese Academy of So­cial Sci­ences, told Bei­jing Re­view.

Roll booster

As an ex­ter­nal fac­tor in the progress of the

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