Offshore renminbi trading: Findings from the 2013 Triennial Central Bank Survey

Geographic Spread of Currency Trading: The Renminbi and Other Emerging Market Currencies

“…This section extends the analysis of the RMB and MXN to other emerging market currencies and follows Cheung and Yiu (2017) by introducing controls. These include changes in a center's economic relationship with China and its own characteristics.…”

“…Only the Singapore dollar provides weak evidence of divergence. Table 3 shows the results including five controls adapted from Cheung and Yiu (2017).…”

“…In particular for the RMB, Ehlers and Packer (2013) found that offshore trading of the RMB was concentrated in Asia in 2013. Cheung and Yiu (2017) found that the distribution of RMB trading was affected by the size of the financial markets in the host jurisdiction, as well as the bilateral foreign direct investment (FDI) flow with China. Contrary to Cheung's (2015) conclusions, the role played by policy variables, such as the People's Bank of China swap lines, emerged as modest.…”

“…A question immediately arises: Is RMB convergence unique? To demonstrate that something different was happening with the RMB, we follow Cheung and Yiu (2017) and repeat our exercise with the Mexican peso (MXN). 2 The MXN is worthy of analysis because it was the most traded emerging market currency before being surpassed by the RMB in the 2016 Triennial Survey.…”

“…We also repeat the analysis for all of the emerging market currencies with widely reported turnover. In this context, we follow Cheung and Yiu (2017) by adding controls for the change in trade and FDI relations between the currency's home country and that of the trading center, as well as for financial and real aspects of the center. We find that the trading of three other emerging market currencies is diffusing according to our hypothesis.…”