CNY (RMB) 02 (Feb 16 - Dec 25)

[winston]

Yuan deposits in Hong Kong in July fell by 6.2 percent to 667.1 billion yuan (HK$776,28 billion), the lowest level since March 2013.

[winston]

Traders go cooler on yuan

Traders are the most bearish on the yuan in almost four months as rising odds of a US interest-rate increase boost the dollar and the cost of borrowing the Chinese currency in Hong Kong jumps.

Twelve-month non-deliverable forward contracts traded at a 2.87 percent discount to the spot rate yesterday, compared with Friday's 2.9 percent that was the biggest gap since May 18.

The offshore yuan erased the day's losses amid intervention speculation. The three-month Hong Kong Interbank Offered Rate climbed 95 basis points, the most since February, to 4.21 percent, data show.

The currency is Asia's worst performer this year with a 2.8 percent drop against the greenback as traders bet the central bank will allow the yuan to weaken to cushion exporters amid a slowdown.

Source: BLOOMBERG

[winston]

A Coming Change to the Reserve Currency?

By Karim Rahemtulla

China’s inclusion in the SDR basket is based on the fact that the country is now the second-largest single country economy after the U.S.

The respective weights of the U.S. dollar, euro, Chinese yuan, Japanese yen and British pound sterling are 41.73%, 30.93%, 10.92%, 8.33% and 8.09%.

These weights will be used to determine the amounts of each of the five currencies to be included in the new SDR valuation basket, which will take effect on October 1, 2016.

The next review of the SDR, where the weighting can change, will not occur until 2021.

Source: The Non-Dollar Report

http://nondollarreport.com/2016/09/chan ... ?src=email

[winston]

Who's Benefitting From China's Accelerating Capital Outflow?

by Gordon G. Chang

Last year, net capital outflow amounted to $676 billion according to the Institute of International Finance, $911 billion according to J Capital Research, and $1 trillion according to Bloomberg.

The general consensus is that Beijing this year has been able to reduce the outbound flood. Citigroup Global Markets estimates there was in the first half of the year net capital outflow of between $281.7 billion and $286.6 billion. It also predicts full-year outflow of $573.2 billion. Citigroup’s annual figure is close to that of the Institute of International Finance, which expects outflow of $530 billion.

Source: Forbes

http://www.forbes.com/sites/gordonchang ... be22f770df

[behappyalways]

Yuan Interbank Rate Surges in Hong Kong in Sign of Intervention
http://www.bloomberg.com/news/articles/ ... tervention

[winston]

IMF expects China moves

by Carrie Chen

China will need to keep improving the transparency of its exchange rate regime once its yuan achieves reserve status as part of the International Monetary Fund's currency basket on October 1, IMF officials said yesterday.

The designation will make the yuan a "freely usable currency" in the eyes of the IMF, available for loans to IMF members and for repayments.

The yuan will join the dollar, euro, yen and British pound in the "special drawing rights" basket that forms the IMF's unit of account.

Relative amounts of these currencies will be fixed for five years on September 30 to achieve weightings determined last year.

"Inclusion of the Chinese renminbi in the SDR basket is an important milestone in the process of China's global financial integration. It recognizes and reinforces China's continuing reform efforts," said Siddarth Tiwari, director of the IMF's strategy, policy and review department.

The yuan will enter the basket at a weighting of 10.92 percent, the US dollar will stay relatively unchanged at 41.73 percent, while the euro, yen and pound will all receive lower weightings.

Tiwari said that going forward, the IMF expects that Chinese authorities will improve the reporting of its reserves composition, achieving full coverage within two to three years.

They are also expected to work with the Bank for International Settlements to improve the quality of their reporting of Chinese banking sector statistics.

Meanwhile, Daiwa Capital said that the inclusion of the yuan to the IMF's SDR basket is merely a drive for reform and it can't reverse the bearish outlook for the currency in the offshore market.

The inclusion does not necessarily mean the yuan will be granted currency reserve status as the decision on whether or not to hold yuan as reserve will depend on the world's central banks.

Prospects of a further depreciation of the yuan have dampened their interest to hold the yuan as reserve currency, Daiwa also said.

Hong Kong's offshore yuan funding pool has tumbled by 33 percent from August last year to July this year due to the depreciation of the yuan, it added. Since July, the yuan funding pool must have declined by another 10 percent.

Source: Reuters

[behappyalways]

2016.10.02文茜的世界財經周報／人幣納入SDR貨幣籃子　權重10.92%排第三
https://www.youtube.com/watch?v=IDMEOInL6mc

[winston]

3 Ways to Profit as a Result of the Chinese Yuan Becoming a “Reserve Currency”

By Keith Fitz-Gerald

Technically speaking, a reserve currency is a currency held in huge quantities by central banks and governments, as part of their foreign exchange reserves.

Usually that’s because the nation holding it does so much trade that they need it to pay liabilities or manage ongoing trade relationships.

The U.S. dollar presently makes up 63% of total currency reserves, while the euro accounts for 21%. That’s followed by the pound sterling, Japanese yen, and Canadian dollar with about 4%, 3%, and 2%, respectively.

The simplest way to play along is with a fund like the WisdomTree Chinese Yuan Strategy Fund (NYSE Arca: CYB), which provides direct exposure to the yuan itself.

A slightly less direct way to get on board but one that will prove every bit as profitable and then some is a choice like the PowerShares Chinese Yuan Dim Sum Bond Portfolio Fund (NYSE Arca: DSUM). This fund invests at least 80% of its assets in yuan-denominated bonds that are settled outside mainland China, generally through Hong Kong.

And, finally, consider companies like Starbucks Corp. (Nasdaq: SBUX), Apple Inc. (Nasdaq: AAPL), and McDonald’s Corp. (NYSE: MCD), all of which have a huge vested interest in China’s growth.

Source: Money Morning

http://dailytradealert.com/2016/10/06/3 ... -currency/

[behappyalways]

Yuan's Value Falls to Six-Year Low
http://english.caixin.com/2016-10-10/100995076.html

[behappyalways]

Goldman Warns China’s Outflows May Be Worse Than They Look
http://www.bloomberg.com/news/articles/ ... -they-look