The Redback comes of age: managing risks and harnessing opportunities in offshore renminbi

The internationalisation of the Chinese renminbi has picked up pace this year, with a growing volume traded in the offshore currency. But its path to becoming a major international currency in its own right still has some way to run, writes Joel Clark

It is now the world’s second largest economy after the US, and its annual GDP growth rate has averaged nearly 9% over the past five years. By any yardstick, the growth of China’s global influence has been staggering, but up until fairly recently, its currency was still tightly restricted and virtually inaccessible to international investors.  That has now begun to change, and a process of liberalisation that began in 2010 has been gathering pace, to the extent that there is barely a bank or trading platform in the FX market that has not put a major focus on offshore renminbi (RMB), known in the industry as CNH. And while Hong Kong may have been instrumental in driving the process, other Asian and European financial centres are vying to attract RMB business as the excitement about the currency continues to spread. “For China to have a freely tradeable currency proxy is truly revolutionary, especially after decades of restrictions which ensured the currency was all but off-limits to...continued

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