Chinese Yuan senior jostling at the top of the global currencyTruth Consultancy
Posted: Sunday, November 6, 2016
Bassam Abdasameea (Abu Dhabi)
Under accelerated China to impose its influence firmly on the map of investments and the global financial and business dealings, it is expected to increase the share of «Yuan» (renminbi) from the global basket of currencies to more than 20% over three years, as a result of the continued growth of China’s economy rates of between 6 to 6. 5% during that period, with the decline in the economic growth of the economies of competing currencies especially the euro and sterling and the yen.
According to the announcement, the «Swift» Global, recently, about tracking the movement of payments in Chinese currency «CNY» that during the past two years (from October 2014 until September 2016), became the seven countries that currency now used for the completion of more than 10% of direct payments from in value terms with China and Hong Kong, bringing the total number of countries using the currency to the 101 around the world.
Coin «CNY» and maintained its position as the fifth most active global currency for payments in terms of value, an increase of 2.03% in its share, compared with 1.86% last month.
In September 2016, the value of payments increased global currency «CNY» by 10.02% compared to August 2016, and this is higher than the average growth rate of 0.93% for all currencies.
Of the 101 countries that use the currency «CNY» to complete the payments, the size of these payments reached 12.9% in terms of value, which means that the use of the currency has increased 2% since October 2014 (11.2%).
Economists forecast experts, can play a new international financial institutions, such as the Asian Development Bank to invest in infrastructure, and the Bank Group BRICs (Brazil, Russia, India, China, South Africa) The new Development Fund and the Silk Road, a major role in the growing share «Yuan» globally .
He described these, the entry of the yuan to the currency as a positive step for the global economy basket, especially since China is the second largest in the world in the size of the economy after the United States and worth approximately $ 11 trillion, noting that the decision of the International Monetary Fund, the annexation of the Chinese yuan to the approved reserve currency basket globally was the result of the growing Chinese trade growth rates globally.
He said for «Union», once you enter the yuan to a basket of currencies early October 2016, accounted «Yuan» share amounted to 10.92%, while the dollar remained in first place share of 41.73%, and the euro in the second place with 30.93% and the Japanese yen increased by 8.33% and sterling 8.09%, according to the rankings of the international Monetary Fund, arguing to reconsider these weights by the end of September 2021, and the relative weight is determined based on the size of the economy of the currency and its share of international trade.
China is seeking to increase its foreign trade volume of nearly 4.8 trillion dollars by the end of this year, saw last year, bypassing the Chinese yuan, Japanese yen to become the fourth-largest currency of payment in the world.
Showed «Swift» that the yuan’s share of global payment market stood at 2.79%, and the share of US dollar 44.82%, and the euro 27.2%, and the pound sterling 8.45%, and moreover, the yuan’s second work became used more in funding trade, and the total value of SDRs to Rnimba currently $ 280 billion.
Experts stressed that the entry of the yuan to the cash reserves basket reflected positively on the global economy and the economies of countries dealing with China, especially the Gulf Cooperation Council (GCC), demanding the monetary and fiscal authorities in the countries of «cooperation» to allocate not less than 10% of the cash foreign in central banks reserves in a currency « yuan »what contributes to greater stability and reduces the consequences of changes in the dollar and the euro.
He predicted Wadah Al Taha, a member of the Advisory Board of the Institute of Securities and Investment British in the UAE, the growth of the yuan’s share of the foreign currency basket rose rapidly as a result of the strength of the Chinese economy and growth rates ranging from 6% to 7% over the next few years, coinciding with the decline in the European economy, and the British In general.
He said Taha: with the introduction of the new basket of currencies for the origins of international monetary reserves, after the adoption of the International Monetary Fund and the adoption of the yuan a reserve currency Monday, November 30, 2015, the number of credit currency rose to 5 coins are «the US dollar and the euro sterling and the Japanese yen and the pound, as well as the yuan ».
He pointed out that the International Monetary Fund, adopted since the nineties of the last century, four currencies only, as a reserve currency cash is «the US dollar and the euro and the pound sterling and the Japanese yen», and review the IMF’s own currency basket of the assets of international monetary reserves and the relative weight of each currency every five years.
Taha said that the diversification of central banks and sovereign funds in the Chinese currency reserves provides alternatives to resist the anticipated economic changes especially the European and the British economy.
For his part, Dr. Ibrahim Alkrnh expert at the Arab Monetary Fund, pointed out that the entry of the yuan in the international club of currencies «SDR basket» has significant positive effects on trade of the countries in the world with China, especially the UAE.
The UAE Central Bank announced recently, that work is underway to complete the operational steps on the Convention on the establishment of the Chinese currency clearing center «Rinimba» in the UAE, and the Convention on the currency exchange between the UAE Central Bank and the Bank of the Chinese people.
He Alkrnh «Adding the yuan to reserve currency in central banks to cope with fluctuations in the exchange rates of other currencies, especially the dollar and the euro», noting that estimates the growth of the share of the yuan in global currency basket for more than 20% within 3 years.
He stressed that the dollar will remain in first place in the range of 40% and the euro in second place, but by less than the current yuan in third place with an approach to the euro, and that the excess portion of the yuan will be at a rate of 2% of the dollar and euro 5% due to expectations of a decline of the European economy and weak growth and calls out from the European Union to some countries after the British experience, while the percentage that takes up the yuan against the Japanese yen, the Pound, about 3%.
In turn, explained Reza Muslim economist, that the Chinese economy was able to impose its currency on the world and push the IMF to integrate «Yuan» within the global currency basket, pointing out that «Yuan» poses safe alternatives foreign cash reserves in the bank.
He noted that China has a foreign financial reserves of $ 3.3 trillion and if the decline of the dollar would be the loss of substantial financial losses, pointing out that the weights of currencies before inserting «Yuan» in the IMF basket distributed among the 41.9% of the dollar, and 37.4% for the euro, and 11. 3% for the pound sterling while the share of the Japanese yen stood at 9.4%.
He pointed out that China is changing its currency from the dollar peg system, to a more open and flexible system, based on the market, it is expected to be floating Chinese yuan during the next two to three years.
He also predicted that China will continue to push for sustainable economic development and is working to improve its financial system, and strengthen the depth of the capital market, and the stability of the global outlook for the currency, making the renminbi an important global reserve currency.
By the end of 2020, you should use the yuan in cross-border transactions, accounting for 35% of the use of both the Chinese yuan and foreign currency transactions in China across the border, after the rate was 8.23% in 2014, according to a report recently issued by the International Monetary Fund.
On the other hand, ruled Dr. Mohammed Abu Ali, Dean of the School of Public Administration at the American University in Dubai, the acceleration of the growth of the share of «Yuan» in a basket of currencies over the next few years, attributing this to the expected increase in oil prices as well as the lifting of the US dollar interest rate, leading to support and promote the Currency US.
He described Abu Ali, the global economic situation during the next phase in a state of uncertainty, pointing out that all the possibilities contained in private under the geopolitical and economic changes rapidly in different parts of the world.
He reported that the growth of the yuan’s share of global basketball depends on the financial reforms required from China, where the financial system needs deep structural reforms, most notably the freedom of the free conversion of the Chinese currency.
Strengthening the global financial system
Abu Dhabi (Union)
China’s central bank made public early last October that China is considering to integrate its currency as a turning point, and would seek to deepen reforms and expand opening up of its financial sector and enhance their contributions in order to strengthen the global financial system.
To approve the adoption of «Yuan» in a basket of currencies on two main factors process was based are that the currencies of the basket will be issued by the largest exporting countries in the world over the last five years, and that the wide use of the currency will be in the performance of international transactions payments and wide circulation in the major exchanges.
And the evolution of the yuan in the job than just the currency to settle accounts to investment and reserve currency to some extent, and this has led to accelerate the march towards global. China has entered into a currency exchange transactions worth more than five trillion yuan, with more than thirty countries and of the dollar value of 6.7 billion yuan, according to reports issued in this regard.
The largest manufacturing country in the world
Abu Dhabi (Union)
China is the largest manufacturing country in the world, with more integrated industries, according to the statistics of the United Nations bodies on Industry «UNIDO». Chinese companies seeking to gain access to the world and draws more than twenty thousand Chinese companies to overseas markets. As the purchasing power of Chinese consumers in foreign markets increased dramatically in recent years. Over the past year, came four Chinese banks among the top ten banks in the world, in terms of capital. China owns commercial assets abroad less than their counterparts in developed countries, and despite the fact that the Industrial and Commercial Bank of China comes in the lead, but his assets abroad represent only 10% of total assets, in addition, Chinese banks have failed to occupy the advanced ranks among the top ten important global systemic banks, according to the financial stability board in 2014.
Trade with the countries of «cooperation» growth
Abu Dhabi (Union)
Dr. Mishaal Samhan Kuwaiti economist said that the recent Gulf compatibility between the UAE and Saudi Arabia with China to activate the direct exchange platform policy, carries the privacy of the new type is that China is a market oil to the Gulf means that oil exports (hundreds of billions of yuan) covers directly from yuan deposits in the Gulf, which will increase the circulation.
With the prospect of trade between China and the Gulf states to grow by 14% annually maximizes the expected benefit of the Gulf of direct exchange platform and reach savings of billions of dirhams size of this decision, as Samhan.
He added that the world is on the verge of a major economic changes, and we must work from now drawing up plans to accommodate these changes and take advantage of them. He stated that China went to internationalize «Yuan» began an economic decision of the year 2011 to go to an internal editing «Yuan» and internationalize it and make it part of a basket of foreign currencies, with a cash reserve is estimated at $ 3.4 trillion.
America’s largest creditor
Abu Dhabi (Union)
China accounts for $ 1.26 trillion of US government securities increased by over 20% of the total external debt to become the largest holder of Treasuries, and the creditor number one in the world and the United States and of bonds owned by foreign governments value of $ 6.2 trillion.
The sale of US bonds and disposal, one of the actual options for China, so after the dollar has become a direct target for China in dealing with the United States and achieve flood the US economy and support «Yuan».
China and sold, the recent US bonds worth $ 100 billion, arguing that this step comes in the context of the strengthening of China’s currency, the official «yuan», in order to help achieve financial stability.
These steps have been confirmed with the announcement of China’s central bank reduced possession of foreign exchange at about $ 315 billion, reducing the value of national currency.