CHINA’s renminbi could replace the dollar as the main currency to finance trade between Chinese and African countries, research by Standard Bank shows.
In a sign of China’s growing influence as Africa’s largest trading partner and investor, Standard Bank estimated that up to 40%, or $100bn, of China’s trade would be denominated in renminbi by 2015.
This amounted to more than the total Sino-African trade last year, the bank’s Beijing-based economist Jeremy Stevens said in a research paper released yesterday .
“In addition, at least $10bn of Chinese investment in Africa will be denominated in renminbi over the same period,” he said.
The Chinese currency already accounts for 13% of the South African Reserve Bank’s trade- weighted exchange rate for the rand, making it the third most important currency in the basket. Mr Stevens said China had no intention of “dumping” the dollar, but merely wanted to broaden its currency’s geographical reach and allow the renminbi to be used for investment purposes.
“The change, which will be gradual, is symptomatic of a more multi polar world,” he said.
The bulk of China’s estimated $3,2-trillion in official reserves was still dollar-denominated, including $1,1-trillion in US Treasury bonds .
However, the use of the renminbi showed that many companies, including some in SA, were becoming comfortable transacting in the currency, Peter Sun, Standard Chartered Bank’s MD of transactional banking, said last week.
Here. H/T to Howard French on G+