Renminbi payment growth shakes off Q4 shivers
Data gathered by Asian Banker Research on renminbi use shows that trade settlements have wavered and deposit growth has dipped, while SWIFT data shows that payments have recovered after a two-month slump. January 20, 2012 | Peter HoflichData gathered by Asian Banker Research’s renminbi center shows that the offshore use of the renminbi (Rmb) saw shaky growth in 2011. Hong Kong offshore renminbi (Rmb) trade settlement dipped in February, July and October of 2011, and Rmb deposits in Hong Kong fell slightly in October, although offshore Rmb loans have been growing steadily in Hong Kong. According to the SWIFT Rmb tracker, the level of commercial and institutional Rmb payments rose in November and remained flat in December after a period of weakness in September and October, led largely by a caving in of Rmb payments in Hong Kong, which saw its share of offshore Rmb payments fall to 80% in November from 85% in August. Wim Raymaekers, head of banking markets at SWIFT, believes that this is a seasonal fluctuation shared by other currencies: in September, Rmb payments fell 18%, compared to other currencies which fell 35%, while in October Rmb payments fell 30% and other currencies fell 7%.The argument is supported by the experience of bankers. “The overriding cause of these flows is the settlement of trade, both LC and open account transactions,” says Maria Mandler, head of Asia Payments and Receipts, GTS, at Bank of America Merrill Lynch. “Payment transactions after shipment are made normally two to three months from the time an LC was issued or two months, if on open account. And under trade settlement, payments in RMB must conform to the original sales documents. Buyers and sellers cannot opt to pay in another currency contrary to that specified in documents, with very few exceptions. We believe the key reason for the changes in our volumes is trade seasonality.” The use of the Rmb for payments is also sufficiently large that it can be impacted by external events and will not naturally grow as it used to when it was rising up from a small base. “The depletion of Rmb FX quota with... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: China, Hong Kong, Rmb, Trade Finance, Transaction BankingChina,HK,Rmb,Trade Finance,Transaction Banking, China,Hong Kong,Rmb,Trade Finance,Transaction Banking, Keywords:SWIFT, Wim Raymaekers, Richard Brown, Fred DiCocco, BNY Mellon Treasury Services, Maria Mandler, BAML SWIFT, Wim Raymaekers, Richard Brown, Fred DiCocco, BNY Mellon Treasury Services, Maria Mandler, BAML
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