COFER data up to December 2023:
Figure 1: Foreign exchange shares in JPY as a share of total reserves (blue), AUD (blue), CAD (green), CNY (red). Source: IMF COFER, accessed 6/18/2024, and author’s calculations.
Peak CNY was 2022Q1 at 2.6%, while the latest is at 2.1%.
In terms of daily foreign exchange earnings, CNY was rising in April 2022.
RULE 2: Share of foreign exchange profits in April for CAN (blue square), for AUD (blue circle), for CAD (green triangle), for CNY (red square), except 1.00. Source: BIS Triennial Survey, 2022.
What has happened to profits from 2022 is an interesting question, especially given the booming trade between Russia and China, hence CNY invoicing/payments. Here is CSIS’s estimate of invoices in RMB from 2011 to 2023Q1.
Source: DiPippo and Palazzi (2024).
This last graph shows how the CNY can benefit from being used as an international currency, driven by trade that China dominates, while losing popularity as a reserve currency, or vehicle currency. However, the gap between what is happening in the financial sector, compared to the commercial sector, reinforces for me the proposition that as long as investors remain suspicious of the Chinese government’s intentions in relation to political risk (including tight currency controls), one should not expect any significant gains from using the CNY as a currency. laid down.
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