Global holding and use of yuan fall
Print Edition
THE international holding and use of the yuan fell in April from a month ago for the first time in over two years, hurt by the currency’s depreciation in the first quarter, Standard Chartered Bank said today.
The bank’s Renminbi Globalization Index, which measures business growth in major offshore yuan centers, dipped 0.8 percent from March to 2,154 points in April, the UK-based bank said in a report.
It was the first monthly fall since the bank started to compile the index in October 2012.
The yuan started this year at 6.20 per US dollar and weakened to 6.27 in early March, before recovering to around 6.20.
The yuan closed at 6.2056 per US dollar in Shanghai yesterday, according to the China Foreign Exchange Trade System.
The bank cited the 0.37-percentage-point drop in trade settlement and the 1.24-percentage-point fall in outstanding Dim Sum bonds for the monthly change.
Outstanding Dim Sum bonds, or yuan-denominated bonds issued in Hong Kong, have fallen for nine months in April from the headline index reading.
But the bank expected the index to recover soon given an improved sentiment over the yuan and recent moves to liberalize the currency.
“Looking ahead, we expect offshore deposits to receive a boost from increased southbound flows via the Shanghai-Hong Kong Stock Connect program in the coming months,” the report said. “The impending launch of the Mutual Recognition of Funds scheme in July and the Qualified Domestic Individual Investors program possibly in the second half should further boost yuan use.”
The MRF allows investment funds to be sold between China’s mainland and Hong Kong with an initial quota of 300 billion yuan (US$48.3 billion) each way, the China Securities Regulatory Commission said.
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