RMB in greater use for cross-border trade

[TaiShang]

RMB in greater use for cross-border trade
Xinhua, August 11, 2016

Chinese currency is increasingly being accepted in cross-border transactions, as the currency gains increased global recognition, a central bank report said Wednesday.

In 2015, the volume of cross-border RMB receipts and payment reached 12.1 trillion yuan (US$1.83 trillion), an increase of 21.7 percent year on year, according to data released by the People's Bank of China (PBOC).

It accounts for nearly one third of the total volume of cross-border receipts and payments.

China has aggressively promoted global use of the RMB, as the world's largest trading nation looks to lower transaction costs in international trade, which currently is mostly settled in U.S. dollars.

Last year, the IMF decided to add RMB into its Special Drawing Rights (SDR) currency basket, making it one of the five reserve currencies fully endorsed by the 188-member organization.

PBOC's latest report showed that by the end of 2015, RMB had become the third most-used currency in cross-border trade and financing. It took fifth place among all currencies for use in international payments and foreign exchange trading.

The report said that RMB will become more accepted in cross-border current account trading, and overseas investors will enjoy wider access to RMB-denominated investment and financing products. The currency looks set to take up a greater share of global reserve currency assets.

IMF data showed that US$94 billion of official assets were already held in RMB at the end of 2014, accounting for 1.1 percent of global foreign exchange reserves.

 

[Shotgunner51]

Nice progress, let's continue!

 

[TaiShang]

Poland first in Europe to issue RMB debt in China
China Daily, August 26, 2016

Poland has become the first European country to issue government debt into China's mainland bond market, with a bond of 3 billion yuan ($452 million), marking a significant milestone for renminbi's growing use internationally, which builds towards its reserve currency status.

The three-year bond has a yield of 3.4 percent. Bank of China and HSBC are joint book-runners and joint lead underwriters. The bond issuance came against the context of renminbi's imminent inclusion in the International Monetary Fund's basket of special drawing rights currencies in October.

The IMF's SDR is an international reserve asset, in the form of a currency basket which the renminbi will join in October to sit alongside the dollar, euro, sterling and yen. It is the major alternative currency to the US dollar, which dominates international foreign exchange transactions.

Issuance of so-called panda bonds, which are renminbi-denominated onshore Chinese debt issued by foreign entities, was first permitted in 2005. As of March 2016, the outstanding amount of panda bonds was only $2.57 billion, according to the ratings agency Fitch. So far most issuers in the past have been international financial institutions.

"This transaction marks another milestone in the rapid integration of Chinese markets into the global market place. It forms part of the preparation for China's accession to the global reserve currency system, the SDR," said Jan Dehn, head of research at the London-based Ashmore Investment Management.

Dehn said such sovereign issues tends to happen in order to meet a specific market demand for the renminbi currency typically coming from corporates that need RMB assets for hedging purposes.

"China is now a hugely dominant trading nation and as RMB has naturally become more flexible as part of SDR inclusion both financial and non-financial corporates that transact with China will naturally have greater hedging needs," said Dehn.

At the same time, increasing issuance in RMB bonds helps China to populate its RMB yield curve, "a desirable piece of financial infrastructure for any country with the ambition of becoming a global reserve currency," Dehn said.

Miranda Carr, senior analyst at Haitong Securities in London, said the bond issuance follows the footsteps of a growing amount of renminbi bonds issued by foreign entities, and this trend is expected to grow as more institutional investors diversify their foreign exchange holdings into the renminbi after the SDR inclusion.

"Because the renminbi's percentage share allocation in the basket of SDR currencies is 10.92 percent, we'd expect more and more international central banks and other financial institutions to increase their renminbi allocation in the longer term, so the issuance of panda bonds would help grow this market," said Carr.

Christian Cornett, corporate partner at the law firm King & Wood Mallesons, said the bond's issue by a sovereign illustrates the "ever increasing range of RMB denominated bonds".

"In line with recent market developments, we expect an increasing diversification and even broader range of RMB denominated bonds going forward," Cornett said.

Ulrik Ross, global head of public sector debt capital markets and sustainable financing at HSBC said the issue allows Poland to diversify its funding sources, it gives Chinese investors an opportunity to diversify their portfolios and it demonstrates the growing importance of the RMB as a global investment currency.

"The transaction is a milestone in creating better links between Polish and Chinese financial markets, which should encourage increased cooperation between financial institutions from both countries," Ross said.

@Shotgunner51

 

[艹艹艹]

IMF announces RMB in SDR starting on Oct 1
By CHEN WEIHUA in Washington (chinadaily.com.cn)Updated: 2016-09-30 15:50
CommentsPrintMailLargeMediumSmall

International Monetary Fund Managing Director Christine Lagarde announces on Friday the launch of thenew IMF Special Drawing Right (SDR) valuation basket that includes the Chinese currency yuan for thefirst time. [Chen Weihua/China Daily]

The International Monetary Fund (IMF) announced on Friday that its Special Drawing Rightsbasket of currencies will for the first time include the renminbi (RMB) as of Oct 1, the start ofChina's National Day holiday.

"The expansion of the SDR basket is an important and historic milestone for the SDR, the Fund,China and the international monetary system. It is a significant change for the Fund, because it isthe first time since the adoption of the euro that a currency is added to the basket," IMFManaging Director Christine Lagarde told reporters at the IMF headquarters in Washington onFriday.

As approved by the IMF Executive Board on Nov 30, 2015, the RMB, also known as the yuan, isdetermined to be a freely usable currency and will be included in the SDR basket as a fifthcurrency effective Oct 1, along with the US dollar, the euro, the Japanese yen and the Britishpound.

The board also decided at the time that the weights of each currency would be 41.73 per cent forthe US dollar; 30.93 percent for Euro; 10.92 per cent for the RMB, also known as the yuan; 8.33per cent for the Japanese yen and 8.09 per cent for the British pound sterling.

"The renminbi inclusion reflects the progress made in reforming China's monetary, foreignexchange, and financial systems, and acknowledges the advances made in liberalizing andimproving the infrastructure of its financial markets," Lagarde said.

"The continuation and deepening of these efforts, with appropriate safeguards, will bring about amore robust international monetary and financial system, which in turn will support the growth andstability of China and the global economy," she said.

The fifth most-powerful woman in the world, according to Forbes magazine, said this milestonealso reflects the ongoing evolution of the global economy. "The Fund plays an important role inthis evolving process, and the inclusion of the RMB in the SDR basket shows once again that theFund stands ready to adapt to change," said Lagarde, who began her second five-year term inJuly.

 

[Shotgunner51]

IMF Launches New SDR Basket Including Chinese Renminbi, Determines New Currency Amounts

September 30, 2016

Today, the International Monetary Fund (IMF) announced the launch of the new Special Drawing Right (SDR) valuation basket including the Chinese renminbi (RMB), and the new currency amounts that will determine the value of the SDR during the new valuation period.

As approved by the Executive Board of the IMF on November 30, 2015, effective October 1, 2016, the RMB is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the euro, Japanese yen, and the British pound ( see Press Release No. 15/543). The Board also decided at that time that the weights of each currency would be 41.73 percent for the U.S. dollar, 30.93 percent for the Euro, 10.92 percent for the Chinese yuan, 8.33 percent for the Japanese yen, and 8.09 percent for the Pound sterling.

To mark the launch of the new SDR basket, Ms. Christine Lagarde, Managing Director of the IMF, stated: “The expansion of the SDR basket is an important and historic milestone for the SDR, the Fund, China and the international monetary system. It is a significant change for the Fund, because it is the first time since the adoption of the euro that a currency is added to the basket.

“The Renminbi’s inclusion reflects the progress made in reforming China’s monetary, foreign exchange, and financial systems, and acknowledges the advances made in liberalizing and improving the infrastructure of its financial markets. The continuation and deepening of these efforts, with appropriate safeguards, will bring about a more robust international monetary and financial system, which in turn will support the growth and stability of China and the global economy.

“This milestone also reflects the ongoing evolution of the global economy. The Fund plays an important role in this evolving process, and the inclusion of the Renminbi in the SDR basket shows once again that the Fund stands ready to adapt to change.”

In addition, the Board also decided today that effective October 1, 2016, the value of the SDR will be the sum of the values of the following amounts of each currency:

These currency amounts are calculated such that the value of the SDR in U.S. dollar terms is the same under the new basket as the value of the SDR prevailing today, and that, at the average exchange rates for the three-month period ending today (July 1 through September 30, 2016), the share of each currency in the value of the SDR corresponds to the weight approved by the IMF Executive Board on November 30, 2015.

The Board’s decision on the amount of each currency in the SDR valuation basket is the final step toward implementing the results of the latest review of the method of valuation of the SDR (see Press Release No. 15/543).

SDR interest rate

The SDR interest rate that will be determined on October 7 and applied for the week of October 10, 2016 will be the first one that reflects the new SDR valuation basket and includes a representative interest rate for the RMB. The change in the SDR interest rate relative to the previous week will reflect the changes in the composition and shares of currencies in the SDR valuation basket, as well as the changes in the interest rates on each component financial instrument.

IMF Communications Department
MEDIA RELATIONS
PRESS OFFICER: Andrew Kanyegirire

Phone: +1 202 623-7100Email: [email protected]

http://www.imf.org/en/News/Articles...hes-New-SDR-Basket-Including-Chinese-Renminbi

 

[AndrewJin]

On National Day?

 

[ahojunk]

On National Day?

Yes.

========
China vows further financial reforms after RMB's SDR inclusion
2016-10-01 09:43 | Xinhua | Editor: Li Yan

China's central bank said Saturday that the country will continue to push financial reforms and market opening after the inclusion of its currency renminbi into the International Monetary Fund's (IMF) Special Drawing Right (SDR) currency basket.

The IMF on Friday announced the launch of the new SDR basket including the yuan, effective from Sunday, saying it was a "historic milestone" for China, the IMF and the international monetary system.

China welcomes the move, which will strengthen the representativeness, stability and attraction of the SDR while advancing the reform of the international monetary system, the People's Bank of China said in a statement on its website.

Inclusion of the renminbi, or the yuan, into the SDR represents a milestone in the internationalization of the yuan and a recognition of China's progress in economic development as well as financial reforms and opening up, the central bank said.

The SDR is an international reserve asset created by the IMF in 1969 to supplement its member countries' official reserves. It can be exchanged among governments for freely usable currencies in times of need.

Last November, the IMF decided to include the yuan in the SDR basket as a fifth currency, effective Oct. 1, 2016.

 

[beijingwalker]

Much To The Dismay Of China Haters, The Yuan Goes Global On Oct. 1
SEP 30, 2016 @ 03:46 PM 7,301 VIEWS

China goes even more global this weekend. Love ‘em or hate ‘em, on Saturday Oct. 1, the Chinese yuan joins the International Monetary Fund’s currency basket. Once the yuan is a full fledged member of the IMF’s Special Drawing Rights, it becomes a currency worth holding at every single emerging market central bank holding foreign currency reserves. That’s a few billion yuan, on the low end, of demand for the Chinese currency…automatically.

Even though the yuan is not an immediate threat to the U.S. dollar’s dominance in world trade, nor as a global reserve currency, the yuan’s official entrance makes it the newest, liquid safe haven. Moreover, unlike the yen and the euro safe havens, this one actually has yield.

Last year, U.S. Treasury secretary Jack Lew said that the yuan was not ready for inclusion in the basket. His statement reflected similar sentiment in Washington, which has sought to roadblock China’s moves within the multi-lateral institutions for years. The U.S. was against China’s proposed Asian Infrastructure Investment Bank, and is one of the few Western powers that is not a member. China is also not a part of the Trans-Pacific Partnership, a proposed trade agreement between the U.S. and every other nation that shares a Pacific coastline except the one nation that buys and sells most with the United States.


With the yuan as a reserve currency, China suddenly becomes an integral part of the debate on where the global monetary system is heading. More importantly, Saturday marks China’s receipt of a seal of approval that tells China’s global trading partners (Brazil, all of Europe), including some that have riffs with the United States (Russia), that Beijing is serious about making the yuan a market currency used in trade settlement. The yuan is expected to replace the Great Britain pound and Japanese yen in trade settlement within the next few years, according to SWIFT.

It won’t replace the dollar, but Asian nations that trade in commodities with the Chinese will increasingly price their goods in yuan.

Worth noting, emerging market fixed income funds love China’s expansion in the currency markets because that expansion requires China to play by certain market rules. It is enticing China to open up, if not create from scratch a brand new bond market. Emerging market bond fund managers are only just starting to get their feet wet in Chinese bonds. At least three new exchange traded funds have been created to give retail investors a chance to hold yuans without opening up a Chinese bank account.

Impact & Implications

The IMF agreed, with Washington’s blessing, to include the Chinese currency in the SDR basket on Nov. 30, 2015. The yuan joins the dollar, euro, yen and pound as part of the IMFs currency and has an initial weighting of 10.9%.

Central banks in the emerging markets — those that hold nearly all of the world’s foreign currency reserves — are unlikely to rush to buy yuans. But there could be an indirect impact in yuan demand from central banks that are positioning in SDRs. Reserves at emerging market central banks are used to manage currency risk and as a back stop to foreign debt service, helping those markets achieve better credit ratings and ease foreign lender risk. Most of these banks hold dollars first, euros second. SDRs are weighted a little more than gold. Yuan, as an individual currency, is not usually weighted. But the IMFs endorsement here “supports long-term demand” for the yuan, say HSBC analysts led by Paul Mackel in Hong Kong in a report published Sept. 13.

“SDR inclusion should encourage further reforms on China’s part to integrate its financial markets globally and push ahead with yuan internationalization,” Mackel says.

As a reserve currency, China’s aim is to be a source of diversification for Asian central banks who do not want to hold negative yielding euro debt, or a very weak Japanese yen. The yen has lost 24.3% of its value versus the dollar over the last five years. The yuan, which everyone insists is too weak, has lost just 4.2%.

The current uni-polar dollar system is not without its challenges. The advent of the euro took some of that away, but global trade is still heavily titled towards the greenback. When Brazil sells soybeans to the Chinese, its priced in dollars. The same holds for the Saudis selling oil to anyone, anywhere. China thinks that the yuan provides markets with another option. Why not buy Saudi oil in yuan? That’s like IMF money for Saudi’s central bank.

Lastly, the SDR inclusion has emerging market investment banks devising new products for investors to diversify into yuan denominated holdings. That will continue.

According to the People’s Bank of China, foreign investors have increased their holdings of yuan-denominated debt by around 100 billion ($14.9 billion) between March and June alone. More timely data from the Chinese Central Depository and Clearing Co. suggests that foreigners were back to buying Chinese debt in August, which has kept the currency strong and irked short sellers waiting for the yuan to hit seven.

With the yuan totally global within the next 24 hours, look for Chinese local currency debt to be included in corporate and emerging market bond indices like the JP Morgan EMBI and the CEMBI indices. When that happens, the yuan will have even more support, if the base case scenario holds up rather than a hard landing.

“The challenges confronting the current U.S. dollar-centric system and its short comings are well known,” says Mackel. “There is a structural shortage of risk free assets, namely Treasuries. The U.S. cannot provide a credible fiscal backstop to a stock of liabilities that is growing faster than its economy while maintaining confidence in the dollar,” he says. “Financial market stress arises when the Fed tries to run a diverging monetary policy from the rest of the world…a very real prospect today.”

Yuan: welcome to the world.
http://www.forbes.com/sites/kenrapo...s-the-yuan-goes-global-on-oct-1/#48b4b49e78a9

 

[beijingwalker]

Historical milestone: IMF launches new SDR basket including China's RMB

 

[Daniel808]

Once the yuan is a full fledged member of the IMF’s Special Drawing Rights, it becomes a currency worth holding at every single emerging market central bank holding foreign currency reserves. That’s a few billion yuan, on the low end, of demand for the Chinese currency…automatically.

Congratulations for China
There would be many central banks buy Chinese Yuan for their holding currency reserves

 

[ahojunk]

RMB's SDR inclusion hailed by China business, analyst
2016-10-02 08:21 | Xinhua | Editor: Wang Fan

The Renminbi's inclusion into the elite reserve currency basket of the International Monetary Fund (IMF) on Saturday was hailed by Chinese businesses and analysts as a "historic moment".

"This is a historic moment," said Lu Jian, vice president of Guangdong Guangken Rubber Group Co., Ltd.

"Ten years ago, the RMB could hardly 'go out of the country'. But now China's opening-up and huge economic size has made it more and more popular in the international market," said Lu.

Early this year, Guangken Rubber launched a 270-million-U.S.-dollar bid for Thailand's Thai Hua Rubber, the world's third-largest rubber producer.

The company then sought loans from domestic and overseas banks, with some offering to fund its bid all in RMB.

The acquisition in RMB helps reduce foreign exchange risk as well as fund-raising cost, said Lu.

"Ten years ago, all our overseas business was conducted in the U.S. dollars and we often did not have RMB clearing banks. It's quite a different scenario now," he said.

Now China has 21 overseas RMB clearing banks across the world.

"Despite the fluctuations in the RMB exchange rate, the international market has not lost interest in the Chinese yuan and on the contrary, the global demand is increasing," said Lu.

Over the past decade, the world has witnessed the rapid rise of the Chinese currency.

Now, the RMB accounts for the third-largest share of the new SDR basket with 10.92 percent, following the U.S. dollar's 41.73 percent and the Euro's 30.93 percent.

"While in college, I never expected that the yuan would become such an important international currency one day," said 31-year-old Xuan Fangyu in Shenzhen.

Xuan works for Hytera, conducting foreign exchange derivatives to help the telecom equipment maker avoid foreign exchange losses.

Xuan said she earlier advised overseas customers to settle in RMB when the Chinese currency appreciated against the U.S. dollar.

"In the earlier period, customers did not trust RMB and were not willing to accept yuan settlement," said Xuan. "But over the past two years, things have changed and many customers, particularly those from the southeast Asia, even proposed to settle in yuan themselves."

In July 2009, China approved pilot program for cross-border trade settlement in RMB, embarking on the internationalization process of the Chinese currency.

The yuan was the fifth most active currency for global payments by value in July, with a share of 1.9 percent, an increase from 1.72 percent in June, according to data from global transaction services organization SWIFT.

China's central bank said on Saturday that the country will continue to push forward financial reforms and market opening after the RMB's SDR inclusion. The SDR is an international reserve asset created by the IMF in 1969 to supplement its member countries' official reserves. It can be exchanged among governments for freely usable currencies in times of need.

Last November, the IMF decided to include the yuan in the SDR basket as a fifth currency, effective Oct. 1, 2016.

Zhang Lijun, a partner with PricewaterhouseCoopers China, said the RMB's SDR inclusion has similar significance with China's entry to the World Trade Organization.

"The two cases also have showed that China helped to improve rather than topple global rules and this has positive significance for the coordination of global economic governance," said Zhang.

 

[TaiShang]

'US dollar flawed... Eventually we will all be using Chinese yuan' - Jim Rogers

Published time: 1 Oct, 2016 , Russia Today

© Stringer / Reuters

Chinese yuan is the only currency on the horizon which can challenge the US dollar to become the world’s reserve currency in the future, says financial commentator and international investor Jim Rogers.

The elite club of reserve currencies used by the International Monetary Fund has a new member, the Chinese yuan.

The list previously had four major world currencies the US dollar, the euro, the British pound and the Japanese Yen. The Chinese yuan, also known as 'renminbi', is the fifth most-used currency in international transactions.

Until 2005 it was tied to the US dollar meaning that when the dollar fluctuated up or down against other currencies, the value of the yuan would move with it.

RT: Why do you think the Yuan is joining the reserve currency basket and what does it mean for the global economy?

Jim Rogers: It is joining because the renminbi is now one of the most important currencies in the world. It is the fifth most commonly used. Remember, 15 years ago nobody knew there was a Chinese currency. It has skyrocketed and it is going to be even more important in the future.

RT: How will this affect the four major world currencies already in the IMF's reserve basket: dollars, euros, sterling and yen? Might this pose a challenge to the dollar’s international dominance?

JR: The fact that it is in the IMF basket now is really just a publicity thing, it is not very important. It is significant that it is there. But that’s about all. Trade flows are what will change that. The fact that the British pound is there doesn’t help it, or the Swiss franc or anything else. Just because you are in the IMF basket means very little. What does mean something is trade flows, and as I’ve said, the renminbi 15 years ago was nothing. Now it’s already one of the most dominant currencies in the world.

RT: China has been the world's largest exporter since 2009, overtaking the US. What does the yuan having reserve currency status mean to traders?

JR: Eventually, we will all be using the renminbi. The renminbi is the only thing I see on the horizon which can challenge the US dollar to become the world’s reserve currency. It is not there yet, but it is moving and moving fast. The US dollar is a very flawed currency; the renminbi has its problems, the main one right now is you cannot buy and sell it. It is a blocked currency. But eventually that will change and it will probably challenge the US dollar…. In Hong Kong, you can use the renminbi in any shop you want. It is happening in Macau, and in Singapore there are people who will take the currency.

It’s not big yet but it is on the way.

 

[ahojunk]

China's Yuan Just Joined An Elite Club Of International Monetary Fund Reserve Currencies
by Reuters
OCTOBER 2, 2016, 3:41 PM EDT

Which helps its recognition as a global economic power.

China’s yuan joins the International Monetary Fund’s basket of reserve currencies on Saturday in a milestone for the government’s campaign for recognition as a global economic power.

The yuan joins the U.S. dollar, the euro, the yen and British pound in the IMF’s special drawing rights (SDR) basket, which determines currencies that countries can receive as part of IMF loans. It marks the first time a new currency has been added since the euro was launched in 1999.The IMF is adding the yuan, also known as the renminbi, or “people’s money”, on the same day that the Communist Party celebrates the founding of the People’s Republic of China in 1949.

“The inclusion into the SDR is a milestone in the internationalization of the renminbi, and is an affirmation of the success of China’s economic development and results of the reform and opening up of the financial sector,” the People’s Bank of China said in a statement.

China will use this opportunity to further deepen economic reforms and open up the sector to promote global growth, the central bank added.

The IMF announced last year that it would add the yuan to the basket, so actual inclusion is not expected to impact financial markets. But it puts Beijing’s often opaque economic and foreign exchange policy in the international spotlight as some central banks add yuan assets to their official reserves.

Critics argue that the move is largely symbolic and the yuan does not fully meet IMF reserve currency criteria of being freely usable, or widely used to settle trade or widely traded in financial markets. U.S. Republican presidential nominee Donald Trump has said he will formally label China a currency manipulator if he wins November’s election.

China stunned investors by devaluing the currency last year and the yuan has since weakened to near six-year lows, adding to worries about already feeble global growth.

Some China watchers also fear that Beijing’s commitment to further market opening and financial sector reforms will fade after its diplomatic success, despite repeated reassurances from Beijing it will continue with the process.

U.S. Treasury Secretary Jack Lew said on Thursday the yuan was “quite a ways” from true global reserve currency status. The new IMF status recognizes the “enormous” change in China in the last 10 years that had made the yuan more open, but Beijing still had work to do to make its currency and its economy more market-driven, he said. “Being part of the SDR basket at the IMF is quite a ways away from being a global reserve currency,” he said.

Capital Economics said inclusion of the currency in the IMF’s SDR basket will have minimal impact on foreign demand for yuan assets, so “offers little support” for the currency.

“If anything, the risk is that official intervention to keep the renminbi stable ahead of its inclusion will subsequently be paired back, allowing for renewed deprecation,” it said in a research note.

The IMF on Friday fixed the relative amounts of the five currencies in the basket for five years, based on their average exchange rates over the past three months.

(Reporting by Nathaniel Taplin; Additional reporting by Ben Blanchard; Editing by Neil Fullick)

 

[my2cents]

'US dollar flawed... Eventually we will all be using Chinese yuan' - Jim Rogers

Published time: 1 Oct, 2016 , Russia Today

© Stringer / Reuters

Chinese yuan is the only currency on the horizon which can challenge the US dollar to become the world’s reserve currency in the future, says financial commentator and international investor Jim Rogers.

The elite club of reserve currencies used by the International Monetary Fund has a new member, the Chinese yuan.

The list previously had four major world currencies the US dollar, the euro, the British pound and the Japanese Yen. The Chinese yuan, also known as 'renminbi', is the fifth most-used currency in international transactions.

Until 2005 it was tied to the US dollar meaning that when the dollar fluctuated up or down against other currencies, the value of the yuan would move with it.

RT: Why do you think the Yuan is joining the reserve currency basket and what does it mean for the global economy?

Jim Rogers: It is joining because the renminbi is now one of the most important currencies in the world. It is the fifth most commonly used. Remember, 15 years ago nobody knew there was a Chinese currency. It has skyrocketed and it is going to be even more important in the future.

RT: How will this affect the four major world currencies already in the IMF's reserve basket: dollars, euros, sterling and yen? Might this pose a challenge to the dollar’s international dominance?

JR: The fact that it is in the IMF basket now is really just a publicity thing, it is not very important. It is significant that it is there. But that’s about all. Trade flows are what will change that. The fact that the British pound is there doesn’t help it, or the Swiss franc or anything else. Just because you are in the IMF basket means very little. What does mean something is trade flows, and as I’ve said, the renminbi 15 years ago was nothing. Now it’s already one of the most dominant currencies in the world.

RT: China has been the world's largest exporter since 2009, overtaking the US. What does the yuan having reserve currency status mean to traders?

JR: Eventually, we will all be using the renminbi. The renminbi is the only thing I see on the horizon which can challenge the US dollar to become the world’s reserve currency. It is not there yet, but it is moving and moving fast. The US dollar is a very flawed currency; the renminbi has its problems, the main one right now is you cannot buy and sell it. It is a blocked currency. But eventually that will change and it will probably challenge the US dollar…. In Hong Kong, you can use the renminbi in any shop you want. It is happening in Macau, and in Singapore there are people who will take the currency.

It’s not big yet but it is on the way.

Just because Jim Rogers thinks that Dollar is a flawed currency does not make it one. It is the trust that is placed by the world trading community that determines its importance. I don't think US will allow the dollar to loose its dominance what may come. China rmb will probably play second fiddle to dollar for foreseeable future. But that itself is an achievement that nobody foresaw two decades ago. China's edge is that it is still the manufacturing factory for the entire world. To retain that place is a tough act to maintain for long.

My2Cents

 

[TaiShang]

Just because Jim Rogers thinks that Dollar is a flawed currency does not make it one.

And vice versa. Same rule applies for your argument.

It is the trust that is placed by the world trading community that determines its importance. I don't think US will allow the dollar to loose its dominance what may come.

That has been mentioned in the article you quote.

China's edge is that it is still the manufacturing factory for the entire world.

China's edge is that it is the largest trading nation in the world. A huge consumer of basic commodities and producer of innovative, value-added products.

To retain that place is a tough act to maintain for long.

Same for every actor. World economy is not static. China has yet to achieve half of its potential.