Renminbi trading in London will boost British SMEs
20/Jun/2014 • Currency Updates•
It has been announced that the China Construction Bank will be designated as a clearing bank in London for renminbi, the Chinese currency. This is part of a plan to make London a hub for Chinese currency dealing.
Ebury believes this will make it cheaper and easier for small and medium-sized enterprises (SMEs) to make payments in the Chinese currency. This could be particularly important for companies that import goods and materials from China.
Enrique Diaz-Alvarez, Chief Risk Officer at Ebury, said: “This is great news for British SMEs. Among our SME customer base, we are seeing a clear trend towards companies using renminbi rather than US dollars to pay Chinese partners. This leads to lower costs and more accurate hedging of risks.
“The addition of the UK as a settlement centre for renminbi will accelerate this trend by increasing liquidity, and lowering costs and operational barriers.
“Emerging market currencies like the renminbi used to be the preserve of large companies with sophisticated treasury arms, but this is no longer the case. Many small and mid-sized companies are going global. This news is an important step in that positive trend.”
London is sustaining its position as an international financial hub and further access to renminbi will allow greater reach for UK businesses looking to expand into Chinese markets. Our recent forecast on the Chinese yuan is also positive as it is set to resume the appreciating trend against USD that it has been following since mid-2010.
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