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The Yuan to take up 10% of central banks’ reserves

THE yuan is expected to take up 10 percent of reserves at world’s central banks by 2025 as reserve managers look to diversify their portfolio, an HSBC survey has said.

Thirty-five central banks, or 53 percent of respondents, said they were either investing or considering investing in yuan assets now, according to a survey in the book HSBC Reserve Management Trends 2015 released on Monday.

The yuan reaching 10 percent global reserves by 2025 was the average view of 51 reserve managers responsible for US$2.7 trillion in reserves, the survey said.

“Reserve managers seem to be caught between a rock and a hard place, with deep concerns about both negative rates in Euro and the prospect of rising rates in the US dollar,” said Christian Deseglise, global head of central banks & reserve managers at HSBC. “In this context, the continued adoption and steady rise of the yuan in central bank reserves is striking.”

The survey found the yuan is expected to account for 2.9 percent reserves by the end of 2015, 6.9 percent by 2020, 10.4 percent by 2025 and 12.5 percent by 2030.

The strongest support came from central banks in Asia, where one reserve manager thought the share would reach 50 percent by 2030.

However, globally only a small minority of reserve managers thought it would approach the share currently invested in euro by 2030.

Reserve managers retain concerns over the yuan’s convertibility, liquidity of markets and quality of credit, the survey said.


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