 Formation of Offshore Markets of Developing Countries’ CurrenciesM.V. Petrov ()
Finansovyj žhurnal — Financial Journal, 2026, issue 5, 92-105 Abstract: The article examines the current state of offshore markets of developing countries’ currencies. The dynamics of growth, the scale and structure of markets, the main factors contributing to their formation, as well as the economic consequences of market activity are analyzed. It is shown that by the mid-2020s a capacious offshore market of the Chinese yuan had developed, second only in volume to the markets of the US dollar, euro and yen. Offshore trading in currencies from a number of other developing countries is also growing rapidly, particularly the Indian rupee, the South African rand and the Brazilian real. The expansion of offshore markets is a manifestation of the increasing internationalization of currencies of the largest developing economies and at the same time serves as a powerful driver of this process, contributing to the implementation of monetary functions of currencies at the international level. Special attention is paid to the analysis of the influence of monetary policy in developing countries on the formation of offshore currency markets. It is demonstrated that this policy is based in the general context of monetary authorities’ assessment of the balance of advantages and risks of currency internationalization. Countries are implementing various approaches to regulating the use of currencies in international circulation, from maintaining strict currency restrictions, as in India and South Africa, to their complete abolition, as in Brazil, Mexico and Turkey. An intermediate model is being implemented by China, which, while maintaining control over the exchange rate of the yuan and cross-border capital movements, has lifted most currency restrictions and consistently implements measures to promote the national currency abroad. At the same time, the high growth dynamics of offshore markets, demonstrated even by the limited convertibility of currencies of large developing countries, allows us to conclude that the increase in offshore trade depends to a greater extent on fundamental factors caused by the strengthening of the positions of issuing countries in the global economy, rather than on the currency regulation regime. Keywords: currencies of developing countries; offshore foreign exchange markets; currency internationalization; monetary policy; currency restrictions (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:fru:finjrn:260506:p:92-105 DOI: 10.31107/2075-1990-2026-5-92-105 Access Statistics for this article Finansovyj žhurnal — Financial Journal is currently edited by Gleb G. Pokatovich More articles in Finansovyj žhurnal — Financial Journal from Financial Research Institute, Moscow 125375, Russia Contact information at EDIRC. |
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