Xinhua News Agency, Shanghai, January 22. "Shanghai Securities News" published an article on the 22nd, "Beyond the Japanese Yen!
Renminbi becomes the fourth largest currency in the world.”
According to the article, the latest data from the State Administration of Foreign Exchange shows that from 2018 to 2021, the cumulative net increase in foreign holdings of domestic bonds and stocks exceeded US$700 billion, with an average annual growth rate of 34%.
At the same time, the global activity of the RMB has reached a new level.
According to the latest data from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), in December 2021, in the global payment currency ranking based on amount statistics, the share of RMB in international payments rose to fourth.
This is also the first time since August 2015 that the global ranking of RMB international payments has surpassed the Japanese yen and ranks among the top four active currencies in the world.
The net increase in foreign holdings of domestic bonds and stocks exceeds US$700 billion in 4 years
"The financial market has opened to the outside world, and RMB assets have become more attractive. The increased allocation of foreign capital to RMB assets has gradually become an important channel for cross-border inflow of funds." Wang Chunying, deputy director and spokesperson of the State Administration of Foreign Exchange, spoke at the State Council Information Office on January 21. said at a press conference on foreign exchange receipts and payments data for 2021.
Wang Chunying said that in terms of the increased allocation of foreign capital to RMB assets, there are three prominent features:
First, the growth rate is fast.
Since the opening of the capital market was expanded in 2017, from 2018 to 2021, foreign capital has accumulated a net increase of more than US$700 billion in domestic bonds and stocks, with an average annual growth rate of 34%.
Second, there is great potential for improvement.
At present, the proportion of foreign capital in my country's stock market and bond market remains at the level of 3% to 5%, which is relatively low compared with developed and emerging economies such as Japan, South Korea, and Brazil, and has great potential for improvement in the future.
Third, the investment value is high.
The correlation between RMB assets and asset prices and returns in developed and emerging economies is relatively low, making it a very good choice for risk diversification in international investment portfolios.
The renminbi ranks among the world's top four active currencies for the first time in six years
The latest data from SWIFT shows that in December 2021, in the ranking of payment amounts in major currencies, the US dollar, the euro, and the pound rank among the top three with 40.51%, 36.65%, and 5.89%, respectively.
The yen's share fell to 2.58%, slipping one spot from the previous fourth place to fifth.
The renminbi rose one place to become the world's top four active currencies.
This is also the first time that the global ranking of RMB international payments has surpassed the Japanese yen since August 2015.
In terms of proportion, the proportion of RMB global payments increased from 2.14% in November 2021 to 2.7% in December; in terms of amount, in December 2021, the amount of RMB payments increased by 34.6% compared with November, and all global payments during the same period increased by 34.6%. The monetary payment amount increased by 6.44% overall.
Zhou Maohua, an analyst at the Financial Market Department of China Everbright Bank (3.420, -0.03, -0.87%), told reporters that in December 2021, the proportion of RMB in global payments will further increase, which is closely related to my country's active foreign trade and the continuous inflow of foreign investment by RMB assets. Basically the same.
"The domestic epidemic prevention and control situation is improving, the economy is operating in a reasonable range as a whole, the structure is continuously optimized, the internationalization of the RMB is steadily advancing, the RMB exchange rate is running smoothly on the whole, and the willingness of overseas trade parties to use the RMB as a settlement and payment tool continues to increase." Zhou Maohua said. .
RMB expected to become the third largest reserve currency
While the renminbi is becoming more active in the payment sector, its status as the official reserve currency is also consolidating.
The latest "Currency Composition of Official Foreign Exchange Reserves (COFER)" data released by the International Monetary Fund (IMF) shows that in the third quarter of 2021, the proportion of RMB in COFER rose again, setting a record since the IMF reported the data in the fourth quarter of 2016. new highs.
In the third quarter of 2021, the proportion of RMB in global foreign exchange reserves rose from 2.61% in the second quarter of 2021 to 2.66%, ranking fifth in the world.
This is also the highest level since the IMF began reporting yuan reserve assets in 2016.
"In recent years, the proportion of renminbi in global foreign exchange reserve assets has also steadily increased, reflecting that global central banks are increasingly favoring renminbi assets." Zhou Maohua said.
It is expected in the industry that the proportion of RMB foreign exchange reserves still has a lot of room for improvement. Correspondingly, there is still great potential for foreign capital to increase their holdings of RMB bonds.
"In 2022, although there are still a lot of uncertainties in the global market, the RMB bond market will still be a favorable choice for global investors to diversify their investments." Liu Linan, head of macro strategy at Deutsche Bank Group Greater China, believes that due to ten The interest rate spread of one-year treasury bonds has remained high for a long time, the proportion of global investors holding RMB assets is relatively low, and the opening of China's financial market to the outside world continues to deepen, global investors will continue to increase their RMB assets.
This will also push the renminbi to play a more important role in the international arena.
Zhou Maohua said that from the perspective of trends, the proportion of RMB in global payments still does not match the size of China's economy and trade volume, and there is still a lot of room for development compared to the US dollar and the euro.
The long-term development of the domestic economy is improving, the internationalization of RMB is steadily advancing, and the establishment of a dual-cycle development pattern in China is accelerated. In the future, the role of RMB in international payments, investment and reserves will continue to increase.
Morgan Stanley Research predicts that the trade-weighted renminbi may maintain a long-term trend of appreciation amid volatility, and it is expected that by 2030, the renminbi is expected to become the third-largest reserve currency after the dollar and the euro.