FX:
Due to the Qingming Festival holiday, People’s Bank of China has not set a renminbi fix against the dollar this morning. In the spot market, CNY will resume trading on Wednesday (also due to the holiday), whereas CNH is trading at 6.8728 as of 10.13am, down 0.2% from previous close, according to Bloomberg data.
The dollar index was trading at 100.420 as of 10.01am, up 0.07% from previous close, according to Bloomberg data. The Thomson Reuters CNY reference index closed at 94.17 on Sunday, down 0.04% from previous close.
Settlement:
Bank of China released its 2016 results on Friday. In its onshore renminbi business, the bank was appointed as the sole settlement bank for the Shenzhen-Hong Kong Stock Connect northbound trading launched in December 2016. Bank of China also pursued business opportunities relating to renminbi’s inclusion in the Special Drawing Rights (SDR) basket, according to the announcement.
In its offshore business, the bank was appointed as the renminbi clearing bank in the US , and acted as a lead arranger for a total of $52.1bn of syndicated loans.
Quotas:
Only Rmb275m ($39.9m) worth of renminbi Qualified Foreign Institutional Investor (RQFII) quotas were given out in March, according to monthly data released by Safe. Eastspring Investments (Singapore) Limited is the sole recipient of the quota.
China Securities Regulatory Commission (CSRC) also disclosed that Australian company VanEck Investments Limited received its first RQFII licence on February 23.
Meanwhile, China Merchants Bank International Asset Management scored a $300m of Qualified Foreign Institutional Investor (QFII) quota. Swiss company Andra AP- fonden and Australia’s FSS Trustee Corporation also secured $655m and $500m worth of QFII quotas, respectively.
Hubs:
Renminbi deposits in Hong Kong fell for the eighteenth consecutive month in February, marking a 36.4% year-on-year fall to Rmb511.4bn, the lowest level since April 2011, according to figures released by the Hong Kong Monetary Authority (HKMA). Meanwhile, the total remittance of renminbi for cross-border trade settlement amounted to Rmb238.3bn for February, compared with Rmb271bn in January.
Tommy Xie, economist at the Oversea-Chinese Banking Corporation (OCBC), said the figures reflect investors’ attitude toward capital control measures by Chinese regulators.
“China’s tightening measures on cross-border renminbi payments continued to weigh while concerns about renminbi risks propelled investors to stay away from renminbi-denominated assets,” said Xie.
IMF:
On March 31, International Monetary Fund (IMF) announced that renminbi accounted for $84.51bn or less than 1% of its currency composition of foreign exchange reserves (COFER) in the last quarter of 2016. This is the first time renminbi featured in the basket, following IMF’s decision to include the Chinese currency in March 2016.
FTZs:
On March 31, State Council approved plans to launch seven FTZs in Chongqing, Henan, Hubei, Liaoning, Shaanxi, Sichuan and Zhejiang. These FTZs will grant greater access to foreign investors to issue renminbi-denominated products, and expand on cross border renminbi settlement business.
The existing Shanghai FTZ will also enjoy a boost of reforms, including government incentives to foreign investors issuing renminbi-denominated financial products and tax cuts to businesses involved in One Belt One Road.
Trade:
Ahead of Donald Trump’s meeting with Xi Jinping later this week in Florida, China’s Ministry of Commerce criticised the US president’s latest executive orders on trade deficit.
“US-China trade is a mutually complimentary, win-win co-operation. It conforms to the rule of globalisation, reflects the structural difference between the two countries and their respective domestic development needs,” said a spokesperson on April 1.