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| Yuan: the better option (EPA/How Hwee Young) |
African
central bank leaders are looking into whether to hold the Yuan as part of their
foreign reserves, highlighting the Chinese money’s rise as one of the world’s
major reserve currencies.
central bank leaders are looking into whether to hold the Yuan as part of their
foreign reserves, highlighting the Chinese money’s rise as one of the world’s
major reserve currencies.
Government
officials from 14 African nations in eastern and southern Africa met yesterday
(May 29) in the Zimbabwean capital Harare to discuss sovereign reserve
management, China press agency Xinhua reported. The forum is being held by the
Macroeconomic and Financial Management Institute of Eastern and Southern Africa
(MEFMI), a regional establishment with members including Angola, Kenya,
Tanzania, Zambia, and Tanzania. Besides strategizing on how to improve the
weakened external positions of member nations during the global economic
downturn, policymakers will also debate how to keep pace with large shifts in
the global economy, where China has risen as a dominant and disruptive player.
officials from 14 African nations in eastern and southern Africa met yesterday
(May 29) in the Zimbabwean capital Harare to discuss sovereign reserve
management, China press agency Xinhua reported. The forum is being held by the
Macroeconomic and Financial Management Institute of Eastern and Southern Africa
(MEFMI), a regional establishment with members including Angola, Kenya,
Tanzania, Zambia, and Tanzania. Besides strategizing on how to improve the
weakened external positions of member nations during the global economic
downturn, policymakers will also debate how to keep pace with large shifts in
the global economy, where China has risen as a dominant and disruptive player.
“Most
countries in the MEFMI region have loans or grants from China and it would only
make economic sense to repay in renminbi (Chinese Yuan),” MEFMI spokesperson
Gladys Siwela-Jadagu said. “With China as the largest trading partner of over
130 countries, the main challenge for African countries is how to benefit from
the new pattern of international commerce,” she added.
countries in the MEFMI region have loans or grants from China and it would only
make economic sense to repay in renminbi (Chinese Yuan),” MEFMI spokesperson
Gladys Siwela-Jadagu said. “With China as the largest trading partner of over
130 countries, the main challenge for African countries is how to benefit from
the new pattern of international commerce,” she added.
The move
underscores China’s push to internationalize its currency in order to promote
trade and investment, besides boosting its soft power. This is especially true
in the era of Xi Jinping whose extended rule and assertive governance are set
to reshape the country’s diplomatic, military, and economic place in coming
years. The move is also indicative of China’s emergence as a greater power willing
to fill in a financial gap.
underscores China’s push to internationalize its currency in order to promote
trade and investment, besides boosting its soft power. This is especially true
in the era of Xi Jinping whose extended rule and assertive governance are set
to reshape the country’s diplomatic, military, and economic place in coming
years. The move is also indicative of China’s emergence as a greater power willing
to fill in a financial gap.
For
Africa, the current interest in the Yuan signifies the growing Sino-Africa
relations, especially as China dishes out loans, funding projects ranging from
energy and transportation to agriculture, telecommunications, and
infrastructure. As China takes on greater responsibilities as a world power,
many African nations are also signing up to join its internationally-funded
bank which offers loans to emerging economies with fewer strings attached.
Africa, the current interest in the Yuan signifies the growing Sino-Africa
relations, especially as China dishes out loans, funding projects ranging from
energy and transportation to agriculture, telecommunications, and
infrastructure. As China takes on greater responsibilities as a world power,
many African nations are also signing up to join its internationally-funded
bank which offers loans to emerging economies with fewer strings attached.
Beijing’s
tight control on capital flows and a lack of transparency in monetary policies,
however, continue to dampen global investor confidence in the yuan. Yet that
hasn’t stopped the International Monetary Fund from adding the renminbi to the
list of the Special Drawing Rights basket, an alternative global reserve asset
to the dollar.
tight control on capital flows and a lack of transparency in monetary policies,
however, continue to dampen global investor confidence in the yuan. Yet that
hasn’t stopped the International Monetary Fund from adding the renminbi to the
list of the Special Drawing Rights basket, an alternative global reserve asset
to the dollar.
This has
pushed banks globally to replace dollar reserves with the Yuan, including the
European Central Bank which converted €500 million worth of its US dollar
reserves into the Chinese currency last year. In March, Nigeria also signed a
currency swap worth $2.4 billion with China, allowing companies to avoid the
difficulty of dealing in dollars while doing business in China and vice-versa.
pushed banks globally to replace dollar reserves with the Yuan, including the
European Central Bank which converted €500 million worth of its US dollar
reserves into the Chinese currency last year. In March, Nigeria also signed a
currency swap worth $2.4 billion with China, allowing companies to avoid the
difficulty of dealing in dollars while doing business in China and vice-versa.
