Expert: to convert the yuan an international currency will be a seismic event

Admin Fri Mar 28, 2014 10:01 am

March 27, 2014 11:34

To an international currency will be a "seismic event" for global markets, where cash flows will lead to a huge currency reserves and perhaps new ones. Said Philippe Le Deputy Governor of Reserve Bank of Australia (the central bank) that the process will take some time, but Beijing has expressed serious last week when it expanded the trading price of the yuan.

Lu said in a speech to the conference center of finance and international regulation in Sydney, "the internationalization of the yuan - and its associated China's move towards capital account liberalization and increased flexibility in the exchange rate system - can cause a shift seismic scene in global monetary and financial." According Haridh Youth

He added, "History teaches us that the easing of the financial rules of the process involves a risk but there are good returns if implemented well." Lu said: The liberalization of the capital account eventually will lead to large flows of funds overseas Chinese and a greater demand for products to hedge the risk of foreign currency.

It is noteworthy that the decline in the Chinese yuan against the U.S. dollar in the wake of taking the People's Bank of China (the central bank) decision to double the daily trading volume of the national currency against the dollar by two percent.

This comes in the context of China's commitment to play a larger role in the market economy as a step to transform the yuan into a global currency.

But trading the Chinese currency against the dollar appeared to be limited, what is likely the view that the central bank will resume intervention to control the exchange rate strongly to stop the fluctuation of the yuan is likely. According to market expectations that China will keep a tight grip on the exchange rate after that overcomes Investors retreat on concerns China's economic growth and uncertainty surrounding the quality of Chinese corporate bonds.

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