Treasury Management Internation Logo

Standard Chartered Renminbi Globalisation Index down 2.8% m/m to 2,085 in June

Published 
  • Down due to lower FX turnover
  • Modest rebound of offshore deposits; further CNY band widening likely in H2-2015

Shanghai – Standard Chartered today announced that the Standard Chartered Renminbi Globalisation Index (Bloomberg: SCGRRGI ), or the RGI, fell for the third consecutive month in June to 2,085 from 2,145 in May. This translates into a 2.8% m/m drop, the largest drop since its inception in December 2010. This concludes a challenging quarter for the CNH market.

The biggest drag on index was from the drop in CNH FX turnover, following a strong Q1 when the spot rate was highly volatile. The good news is that volatility has picked up again since July on the back of renewed talk of band widening. Preliminary data shows a healthy rebound in CNH FX turnover last month, which should bode well for RGI stabilisation in Q3. We are also encouraged by the underlying steadying trends in offshore deposits, cross-border payments and Dim Sum bonds outstanding. Offshore deposits contributed positively to the headline RGI for the first time in June (+0.26ppts) since February, led by Hong Kong (+CNY 20.6bn in June) and Taiwan (+CNY 1.9bn).

Stock market turmoil has not stopped China from pushing ahead with more policy liberalisation. Pilot Renminbi inbound loan schemes have been expanded to more onshore cities, while Guangdong has released an implementation plan for its Free Trade Zone. Foreign public sector entities now have easier access to the onshore market. IMF Managing Director Lagarde recently reassured investors that China’s stock market turmoil would not affect the Renminbi’s Special Drawing Rights (SDR) review, which is still on track to be concluded before this year end. We continue to see at least a 60% chance of SDR for the Renminbi this year.

We see PBoC further widening the trading band in H2-2015 while keeping CNY spot relatively steady. We believe a band widening is likely to be seen favourably as China seeks SDR inclusion. However, unlike on previous occasions of band widening, we expect Beijing to continue to foster CNY stability. Widening the CNY band only to see the currency drop materially is not in Beijing’s interests – FX rate uncertainty will likely lead to more capital outflows – and is therefore unlikely, in our view.

In addition to China’s policy push, the London Metal Exchange market also recently announced its decision to accept CNH as eligible cash collateral, joining the US Dollar, Pound Sterling, Euro and the Yen as only the fifth currency eligible as cash collateral. This is yet another key milestone in the internationalisation of the Renminbi and in line with its status as the fifth most used global payment currency.

Standard Chartered launched the RGI in November 2012. The Index covers seven markets in offshore RMB business: Hong Kong, London, Singapore, Taiwan, New York, Seoul and Paris. It measures business growth in four key areas: deposits (denoting store of wealth), Dim Sum bonds and Certificate of Deposits (as vehicles for capital raising), trade settlement and other international payments (unit of international commerce) and foreign exchange (unit of exchange). As the Renminbi further internationalises, there is capacity to include additional parameters and markets.

 

Standard Chartered Renminbi Globalisation Index

Objective

The first industry benchmark that effectively tracks the progress of RMB business activity.  Offers corporates and investors a quantifiable view of the latest trends, size and levels of offshore activity that are driving RMB adoption

Index Parameters

Deposits

Dim Sum Bonds and Certificate of Deposits

Trade Settlement & Other International Payments

Foreign Exchange Turnover

Markets

Hong Kong

London

Singapore

Taiwan

New York

Paris

Seoul

Investability

Non-tradable

Frequency

Monthly

Base value and date

100 at 31 December 2010

Inception Date

14 November 2012

Methodology

Weight of each of the four parameters are inversely proportional to their 24-month normalized standard deviations

Most recent episodes

HSBC’s Sibos Spotlight: Investing in the Future – from Diversity to Green Deposits

In the final instalment of HSBC’s Sibos Spotlight, Eleanor Hill (TMI) invites Nadine Lagarmitte and Suraj Kalati (HSBC) to consider how corporates’ attitudes to...

25:12

HSBC’s Sibos Spotlight: The ESG Landscape – what every treasurer needs to know

In the third edition of HSBC’s Sibos Spotlight Podcast series, TMI’s Eleanor Hill invites Farnam Bidgoli (HSBC) to provide an in-depth overview of the current ESG...

16:24

The Path to Transformational Global Cash Visibility

Davina Bradley (CEVA Logistics) and Conor Deegan (CashAnalytics) join TMI’s Eleanor Hill to explore how treasurers can transform their cash visibility and forecasting within their business in a matter of weeks using a...

33:16

HSBC’s Sibos Spotlight: Embedding ESG in Trade and Supply Chains

In the second podcast from HSBC’s Sibos Spotlight series, TMI’s Eleanor Hill speaks to Surath Sengupta (HSBC) about embedding ESG into trade and supply chains....

20:58

Lost in Transaction: Overcoming Payments Pitfalls

From simple errors to duplicates, fraud and sanctions violations, there are a number of areas where payments can go wrong – especially in the real-time environment. In this podcast, TMI speaks to Andrew Ferrao...

34:25

HSBC's Sibos Spotlight: Central Bank Digital Currencies

The first edition of HSBC’s Sibos Spotlight series sees TMI’s Eleanor Hill joined by Mark Williamson and James Pomeroy (HSBC) to discuss the hot topic of Central Bank Digital Currencies (CBDCs). Our guests discuss...

25:48

Payments Vision 2025: The Inside Track

Wim Grosemans, Steven Lenaerts (BNP Paribas) and Wim Raymaekers (SWIFT) join TMI’s Eleanor Hill to outline their vision for the payments landscape in 2025. Our guests consider how recent developments such as instant...

28:21

Stepping Out from the Shadows

“Treasurers needs to step out of the shadows and into the sunshine in terms of their strategic contribution.” claims Zitah McMillan, Co-Founder and CEO, Predictive Black. In this podcast, hosted by TMI’s Eleanor Hill, our guest declares that the...

16:54

Why the ‘One Size Fits All’ Approach is Outdated - A Cash Segmentation Treasury Masterclass

With the ongoing low interest-rate environment and increasing regulatory change, it’s more important than ever for treasurers...

23:55

Instant Payments: Instant Rewards

TMI’s Eleanor Hill sits down in the virtual TreasuryCast studio with J.P. Morgan’s Global Head of Real-Time Payments, Cyrus Bhathawalla, to discuss how treasurers can capitalise on the evolving nature of real-time payments. Our guest contemplates the elements...

23:55