Run away from the Renminbi

-.-

Global use of the Renminbi dropped sharply in February, reversing a 5 year trend of gaining traction in the global rankings of currencies used for payments by Swift.

Accounting for just 1.76% of payments in February, down from 2.45 per cent in January, early warning signs of stagnation for China looking to internationalize the Renminbi. More worryingly, this months 1.76% reading is the lowest reading since October 2014.

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More worryingly, the Renminbi only just held on to its global ranking of 5th this month, notching above the Canadian dollar’s 1.73%. Having jumped from 14th in February 2013 to 8th a year later, the currency has settled on being the 5th most used currency globally since March 2015.

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Also notable is the increasing share of the Japanese Yen, rising sharply as the Bank of Japan adopted a negative interest-rate policy. Will we see an unwind of the Yen-based carry trade?

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