Can I trade in RMB?

You can trade the RMB directly by setting up an online foreign-exchange trading account. After funding the account, you can trade currency pairs such as USD/CNY, which is the U.S. dollar versus the Chinese yuan. Going “long” on this pair means speculating that the dollar will rise against the yuan.

What is RMB settlement?

Trade settlement – The internationalization of the RMB allows foreign companies trading with mainland Chinese companies to settle the trade in RMB, thus, reducing FX cost, open up the opportunity to the larger markets and often secure better trade terms.

Why would the Chinese government wish the renminbi to become a global currency?

This paper analyzes the benefits and costs of the RMB becoming an international currency. The benefits include reduced exchange risk, promotion of the development of the financial market, and expansion of firms in the People’s Republic of China.

Where did China exchange its renminbi in 2009?

2009: Offshore Renminbi (CNH) Since 2009, China has signed currency swap agreements with numerous countries and regions such as Argentina, Belarus, Brazil, Canada, ECB, Hong Kong, Iceland, Indonesia, Malaysia, Singapore, South Korea, Thailand, the United Kingdom, Uzbekistan and Tajikistan.

How is the renminbi being used as a reserve currency?

According to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the path of RMB internationalisation can be divided into three phases—first as usage for trade finance, then for investment, and in the longer term, as reserve currency.

Are there any bilateral currency swaps with China?

Similarly, Argentina increased its currency swap agreement with China from CN￥70 billion (US$9.94b) to CN￥130 billion (US$18.47b) in 2018. These deals represent the progress being made on RMB internationalization and the potential for bilateral trade to expand in the future as China remains a strong and dependable financial partner.

How are currency swap agreements different from Repo lines?

They are different from the liquidity swap lines that the Federal Reserve established with several central banks during the Global Financial Crisis, which are essentially repo transactions based on prevailing exchange rates. In contrast, China’s bilateral currency swap agreements are designed to facilitate settlement in renminbi.