(Yicai Global) June 19 -- Foreign exchange reserve managers have expressed confidence in the Chinese yuan’s growing worldwide presence in a new survey with respondents expecting the currency to make up 8.5 percent of global forex by 2020, up from 1.2 percent at the end of last year.
The inclusion of the yuan in the International Monetary Fund’s Special Drawing Right valuation basket and the consistent opening-up of China’s capital markets are key drivers of the optimism, state-backed Economic Information Daily reported the HSBC-sponsored survey’s findings as saying.
Conducted by the International Journal of Central Banking in the first quarter of this year, the survey covered 79 central banks that manage a combined USD5.5 trillion in foreign exchange reserves, accounting for over half of the global total.
Respondents’ outlook for the yuan appears more optimistic compared with the same survey conducted three years ago prior to the currency’s inclusion in the SDR currency basket. In 2015, reserve managers predicted that the proportion of the yuan compared with total worldwide forex reserves would reach 6.9% by 2020.
As China promotes the opening-up of capital markets and facilitates cross-border investments using the yuan, the improvement in forex reserve managers’ outlook is encouraging, said Huang Bijuan, chief executive of HSBC’s China unit.
Future interest in the currency among foreign investors is expected to receive further boosts from the inclusion of China’s A-shares in the MSCI Emerging Markets Index, the roll-out of measures to make cross-border yuan transfers more convenient and the inclusion of Chinese bonds in the global major bond indexes in the future.
Editor: William Clegg