“It’ll benefit China’s push to make the yuan an official reserve currency and its aim is to make the currency more internationalized”.
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“The move will be a big boost to the yuan’s inclusion in the IMF’s special drawing rights (SDR) basket”, said Joey Chew, Asian currency strategist at HSBC in Hong Kong.
Trading in Shanghai will close at 11:30 p.m. local time instead of 4:30 p.m., according to the people, who asked not to be identified because the deliberations haven’t been made public. The yuan already meets the first criterion. It has also given offshore markets a window to trade on policy changes unveiled after domestic markets are closed. The debt would be issued by the People’s Bank of China, the country’s central bank.
“(That) perhaps suggests something about where the main RMB trading hub will be”.
China Construction Bank has sold 1 billion yuan ($158.20 million) of offshore yuan bonds in London, in a move to provide more investment products to European investors and speed the internationalisation of the currency.
London is the biggest yuan clearing center in Europe and trails only Hong Kong and Singapore in the offshore market, according to the Society for Worldwide Interbank Financial Telecommunications.
The authorities are expected to loosen monetary policy further in coming months, but questions surround its effectiveness, partly because it has encouraged investors to move more money out of China.
The People’s Bank of China did not immediately respond to requests seeking comment. The sources declined to be named due to the confidentiality of the matter.
China’s planned sale of sovereign bonds was earlier reported by the Financial Times and comes before President Xi Jinping pays his first state visit to the United Kingdom during the October 19-23 period.
A summer stock market crash and a surprise devaluation of the yuan in August sent tremors through global markets, raising concerns both inside and outside of China about Beijing’s ability to manage its economy. That left investors anxious that economic growth was slowing down faster than previously thought and that other devaluations may follow.
“It’s onshore hours that they have extended so not something that affects us directly”.
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As one of the few major countries to have a trade surplus, support from China could be needed if the world experienced another financial crisis, he said.
