Yuan Internationalisation Positive For Chinese Firms

BEIJING, Dec 2 (Bernama) -- Continued internationalisation of the Chinese yuan will have a long-term positive impact on Chinese corporations, Xinhua News Agency reported Wednesday. The International Monetary Fund (IMF)has decided to include the yuan or renminbi (RMB), in its Special Drawing Rights (SDR) basket, marking a milestone in the currency's global march and a vote of confidence in China's financial reforms. Rapid growth in foreign holdings of yuan-denominated assets and use of the currency in cross-border payments will likely reduce currency exchange costs over the long term, the news agency quoted Fitch Ratings as saying. It said the yuan has risen to become the fifth most used currency globally for cross-border payments, according to September data, up from 14th just three years ago. The yuan is now the most used currency for intra-regional payments in the Asia-Pacific, according to Fitch. As the yuan grows in popularity, the exposure gap for Chinese corporations between their operating currency and funding currency will narrow, it added. Rising participation by international institutional investors in the local market may also strengthen investor awareness of corporate governance issues. This includes greater transparency and legal protections, areas where improvements would be credit positive for Chinese corporations. --BERNAMA