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Geographic spread of currency trading: The renminbi and other EM currencies

Yin-Wong Cheung, Robert McCauley () and Chang Shu ()
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Chang Shu: Bloomberg

No GRU_2019_011, GRU Working Paper Series from City University of Hong Kong, Department of Economics and Finance, Global Research Unit

Abstract: We study the ongoing diffusion of renminbi trading across the globe, the first such research for an international currency. We analyse the distribution in offshore renminbi trading in 2013 and 2016, using comprehensive data from the central bank triennial survey of foreign exchange markets. In 2013, Asian centres favoured by the policy of renminbi internationalisation had big shares in global renminbi trading. In the following three years, renminbi trading seemed to converge to the spatial pattern of all currencies, with a half-life of 7-8 years. The previously most traded emerging market currency, the Mexican peso, shows a similar pattern, although it is converging to the global norm more slowly. Three other emerging market currencies show a qualitatively similar evolution in the geography of their offshore trading. Overall the renminbi’s internationalisation is tracing an arc from the influence of administrative measures to the working of market forces.

Keywords: international currency; FX turnover; renminbi internationalisation; international financial centre (search for similar items in EconPapers)
JEL-codes: C24 F31 F33 G15 G18 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2019-05-30
New Economics Papers: this item is included in nep-mon and nep-pay
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Published in China & World Economy, first available on 07 August 2019

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