BEIJING, March 3 . Xinhua Morgan Stanley economist Robin Xing has said the Chinese yuan will receive more recognition as a global reserve currency thanks to the continued opening in the country’s capital market.
“The yuan’s share in global reserves will likely climb to 5 percent in the next five to 10 years, from the current less than 2 percent,” Xing said. “The rise means central banks and sovereignty funds will purchase more yuan-denominated assets.”
By then the currency will surpass British pound and Japanese yen to be the third largest reserve currency, after the U.S. dollar and euro.
Xing’s forecast of the yuan’s rising influence is based on the country’s financial opening-up.
China has stepped up moves to encourage foreign investment in securities and bond markets, launching trading connect programs and granting overseas investors a higher quota. “The financial reforms will make investors more confident about Chinese assets,” Xing said.
Xing also predicts that the yuan will maintain strength against a basket of currencies in the next two years, and there will be a significant increase of capital inflow into China’s capital market. Enditem