CNH: A gradual recovery – Standard Chartered

Standard Chartered's renminbi internationalization tracker rebounded in September-October after falling in August. Offshore deposits, Dim Sum bonds and foreign holdings of onshore RMB assets were key contributors. Government to be more proactive in promoting RMB global usage, according to the 15th FYP proposals. Hong Kong’s role as a global offshore RMB business hub likely to be further advanced, Standard Chartered's Economist Hunter Chan reports.

Stepping up efforts

"The Standard Chartered Renminbi Globalization Index (RGI), our proprietary measure of international Renminbi usage, continued to recover in September-October from the dip in August. All components had contributed positively to the RGI in September partly due to a relatively stable external environment before the resurfacing of the trade conflict in early October. Sentiment improved after the late-October trade agreement, which should support a recovery in the global use of Renminbi."

"By breakdown, the ‘deposit’ component rebounded in September-October after four straight months of declines from May-August. Increased offshore RMB bond issuance from the People’s Bank of China (PBoC), local governments and corporates may have lifted offshore CNY (CNH) demand. The ‘Dim Sum bonds’ component rose from August-October. Total onshore RMB assets held by overseas entities also picked up to more than a 43-month high of CNY 10.4tn in September mainly on a larger increase in equity holdings. ‘FX turnover’ jumped in September partly due to CNY appreciation against the USD, but retreated after the exchange rate stabilized. ‘Cross-border payments’ recovered in August-September, but fell in October partly on trade policy uncertainty in early October."

"The 15th Five Year Plan (2026-30) proposals reiterated the goals to advance RMB internationalization, pursue further opening up of RMB capital accounts and construct a homegrown, risk-manageable cross-border RMB payment system. Hong Kong’s role as a global offshore Renminbi business hub is likely to be promoted further. New initiatives were recently introduced to bolster offshore liquidity and facilitate financing."