Leap-frogging the Australian Dollar
FX reserve managers and sovereign wealth funds are adding renminbi to their portfolios, setting the currency on a path towards being recognised as a fully-fledged reserve currency one day. When China’s Ministry of Finance issued CNH bonds on Wednesday, sovereign names took down RMB 2 bn worth of the supply, according to the HKMA. That seems like a relatively small amount, but we should bear in mind that this is just the latest instalment – sovereign names have been building up offshore RMB exposure since at least June 2012. And let’s not forget the dozen or so sovereigns who are eligible to hold RMB assets onshore too under the QFII program.
Read the full report: UBS
