Date
29 May 2017
Standard Chartered Bank's Becky Liu (left) said the renminbi may then strengthen to 6.42 to the dollar by the end of next year. Photo: HKEJ
Standard Chartered Bank's Becky Liu (left) said the renminbi may then strengthen to 6.42 to the dollar by the end of next year. Photo: HKEJ

US$60 bln seen flowing into RMB assets after SDR inclusion

More than US$60 billion is expected to flow into yuan-denominated assets in the coming months after the International Monetary Fund approved the renminbi’s inclusion in its Special Drawing Rights currency basket, Standard Chartered Bank senior rates strategist Becky Liu said.

However, the bank foresees no sharp rebound in the exchange rate of the Chinese currency soon, the Hong Kong Economic Journal reported on Friday. 

Amid a strong US dollar, the renminbi is expected to weaken to 6.55 against the greenback by the first quarter of next year, and strengthen to 6.42 by the end of 2016.

Two types of institutions have to adjust their asset portfolios because of the renminbi’s inclusion in the SDR basket, Liu said.

These institutions include central banks that hold both long and short positions on SDR currencies, as well as multilateral organizations such as the World Bank and the Asian Development Bank.

Such institutions currently own assets worth more than US$500 billion.

Given the 10.9 percent weighting of the Chinese currency in the SDR basket, an estimated US$60 billion is likely to flow into yuan-denominated assets, she said. 

[Chinese version中文版]

– Contact us at [email protected]

VW/DY/CG

Hong Kong Economic Journal

EJI Weekly Newsletter

Please click here to unsubscribe