BEIJING, Jan. 7 (APP): The Chinese currency Yuan is currently seen as the most emerging currency in markets around the world and experts believe that in just a few years it will be one of the most widely used currencies.
On November 30, 2015, the Executive Board of the International Monetary Fund (IMF) announced inclusion of the Chinese Yuan in the elite basket of currencies called Special Drawing Rights (SDR), as a fifth currency, along with the US Dollar, Japanese Yen, British Pound and the Euro. The Chinese Yuan, also called Renminbi (RMB), joined the elite basket on October 1, 2016.
Shan Saeed, Chief Economist at Juwai IQI, told China Economic Net that the Chinese Yuan moved very aggressively as most of the countries adopted currency swap with the Chinese government, especially with the People’s Bank of China (PBOC).
“China’s already signed swap agreement with more than 100 currencies, especially with Yuan, and China is quite keen to launch an internationally Yuan because they believe that Yuan is ready for take-off, but obviously, they want to move Yuan in a very structured manner which is the right approach at this point of time,” he added.
“China and Pakistan already signed the Currency-Swap Agreement (CSA) which Pakistan tends to benefit more because Pakistan is one of the biggest recipients of Belt and Road Initiative (BRI) projects, especially China-Pakistan Economic Corridor (CPEC), which is called the flagship project of BRI.
Recently, China has done a lot of financial agreements with Pakistan and this has helped Pakistan in maintaining its balance of trade and balance of payment positions,” Shan stated.
He said recently PBOC had given an indication to the market that they wanted to have digital Yuan, which was quite acceptable because most of the Chinese did not have paper currency, they either used Alipay or WeChat.
“China is moving ahead at a much faster pace, in terms of technology and society, in general, is becoming cashless, where you have countries like Sweden and Singapore which are in the league, where more and more consumers are having a cashless transaction,” Shan said.
“I think the Chinese Yuan has a huge future. Last year alone, if you imagine Chinese Yuan was trading at 7.11 against a USD, and as of today, the Chinese Yuan is trading at 6.45. So, it has appreciated more than 7% against USD. It has held strong against the dollar, taking into account the exogenous factors,” he mentioned.
Shan said 2020 was perhaps one of the first years, the global economy had seen because of COVID-19, but the Chinese economy had already recovered and even came out much stronger. China was already recording a trade surplus, despite COVID-19 last year.
Economist magazine in the latest outlook has mentioned the Chinese economy will achieve a growth rate of 7.3%, and experts believe that China’s growth in 2021 will be between 7% to 8% which is perhaps the highest in Asia.