China’s central bank might move to introduce greater flexibility to renminbi’s exchange rate, which in turn would increase the currency’s two-way volatility, according to HSBC.
The IMF has endorsed the renminbi as a freely usable currency, recognising China’s increased importance in the global financial market. The renminbi’s journey to attaining this status was never straightforward.
Finance ministers and central bankers from the G20 group have promised to give each other a heads-up on actions that could trigger major devaluations of their currencies.
While analysts generally believe China’s latest cuts would release more liquidity into the renminbi market, it is still too early to get excited, CT warns.