On first glance there appeared to be few significant changes of note when looking at the currency-specific data in the latest BIS survey. But scratch beneath the surface and this data asks some important questions, says Galen Stops. Looking at the data regarding the currencies themselves in the latest OTC FX turnover survey from the […]
In a speech at the Jackson Hole symposium at the weekend, Bank of England Governor Mark Carney raised the question of a global digital reserve currency, asking whether it may not be the most suitable long term solution to reform of the international monetary and financial system (IMFS). In a wide ranging speech on the […]
China has fundamentally changed its approach towards RMB internationalisation, according to BNP Paribas China’s chief China economist, XD Chen.Speaking at a briefing in New York today, Chen explained that for the past five years the authorities in China had one main policy stance regarding the renminbi: to promote the internationalisation of the currency.However, he then added: “But now this policy stance, in our observation and together with our policy consultation, is no longer. In other words, they’re not going to use the government’s force to promote renminbi internationalisation, instead they will follow market forces.”
Greater automation in emerging markets is widely seen to be merely a matter of time. Profit & Loss talks to Darryl Hooker, former co-head of EBS Brokertec Market and currently consultant at Capitolis about his experience in helping bring a larger ‘e’ focus to Russia and China.
Profit & Loss: Can you give us an insight into the thinking that saw you focus on first Russian markets and then China when you were at EBS? What are the main signals that identify a frontier market ready to move into the mainstream of EM?
Darryl Hooker: A common pitfall in emerging markets is to make the mistake of considering them collectively despite the fact that they have very particular and specific nuances.
When assessing which large tail risk events are likely to take place in 2017, speakers at Profit & Loss’ Forex Network London emphasised that there are other risk factors being overlooked that might have a greater impact on financial markets.
“Like last year, the tail risks this year are quite high compared to normal,” said Colin Harte, strategist and senior portfolio manger at BNP Paribas Investment Partners. “There are some quite material risks that – if they come to pass – could have a significant impact on markets.”
He noted, however, that many of the expected tail risk events from 2016 were less dramatic than expected in the end: sterling took an obvious hit after the Brexit result, but soon became range-bound again, while the Trump election victory actually led to a rally in the equity markets.
Despite a bearish outlook on China and its currency right now, panellists at Profit & Loss Shanghai claimed that in the long-term, the fundamentals are in place for RMB development.
While China’s economy continues to enjoy growth rates that most fully developed economies could only dream of, the slowing of this growth rate has led to negative sentiment about China from some international investors.
“The perception outside of China about China’s economic rebalancing is very critical right now,” said Ivan Shi, a director at Z-Ben Advisors.
The Chinese authorities face a range of challenges as they seek to protect the economy in the face of downward RMB pressure.
In 2016 the Chinese authorities are assumed to have intervened in the currency markets, not in order to depreciate the RMB but actually to maintain the value of the currency.
“The consensus from economists is that there’s going to be downward pressure on the RMB,” noted Shawn Baldwin, chairman of AIA Group, on the opening panel at Profit & Loss Shanghai.
With new data showing that RMB trading grew 81.8% over the past three years, Galen Stops looks at the continued development of the currency and the growth of FX trading in the APAC region.
The growth of Chinese renminbi (RMB) trading in the global FX market has been well documented by a variety of sources, whether anecdotally by traders, logically by economists or quantifiably by trading venues and other data providers.
It was therefore no surprise when the latest Bank for International Settlements (BIS) triennial survey showed that the average daily turnover of RMB has grown from $120 billion in 2013 to $202 billion as of April 2016, an 81.8% increase.
Data from Swift shows that in July RMB bounced back to its position as the fifth most active currency for global by payments by value, with a share of 1.90%, a slight increase from 1.72% in June 2016. Overall, the data shows that RMB payments value decreased by 0.68% compared to June 2016, whilst in […]
The executive board of the International Monetary Fund (IMF) has amended its rounding methodology for determining currency amounts in the Special Drawing Right (SDR) basket. The decision, reached July 20, was in order to “make it less complex and also to more closely align the currency weights with those approved by the IMF executive board,” […]