China to actively and steadily push forward RMB internationalization

Updated: August 6, 2020 Source: Xinhua Silk Road
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China Foreign Exchange Trading System (CFETS) announced Monday that from August 1, 2020, the bidding and inquiry transaction fees of Renminbi (RMB) against Singapore dollar, ruble, ringgit, New Zealand dollar, South African rand, Saudi Riyal, UAE diram, Polish zloty, Hungarian Forint, Turkish Lira, Korean won and Thai baht will be temporarily exempted for three years.

Experts believe that this will undoubtedly increase the proportion of RMB-denominated settlement in trade and investment between China's foreign trade enterprises and their partners in these countries, which is conducive to promoting the internationalization of RMB.

Market data showed that in July, the US dollar index fell from 97.37 to 93.49, setting the worst monthly performance in the past 10 years. Different from the downward trend of the U.S. dollar, the RMB exchange rate remained stable.

According to the latest data released by CFETS, also known as the National Interbank Funding Center, the central parity rate of the Chinese currency RMB strengthened 177 pips to 6.9803 against the U.S. dollar Tuesday, and the appreciation of the central parity has been the highest since July 22, 2020, and the biggest increase since July 7, 2020.

China's central bank said Monday that it will actively and steadily push forward RMB internationalization and capital account convertibility, and again vowed to open up the financial sector at a steady pace.

According to E Zhihuan, chief economist of Bank of China (Hong Kong), in the current global financial market downlink, the RMB exchange rate is more robust than other currencies.

E Zhihuan added that, there are always obvious rebounds after a short period of declines, which indicates that fluctuation of the RMB exchange rate, while maintaining flexibility, has certain resilience. Therefore, in the post epidemic era, the hedging function of RMB exchange rate should be established to provide stronger support for the international use of RMB.

Editor: Ting Liu