The orderly promotion of RMB internationalization helps foreign trade enterprises avoid the risk of exchange rate fluctuations

According to Xinhua Finance and Economics on August 6th, since the beginning of this year, the currencies of most sub Saharan African countries have weakened against the US dollar, and the soaring import prices of goods have exacerbated the inflationary pressure on the African continent. Discussions of "de dollarization" have emerged multiple times. Meanwhile, with the continuous deepening of China Africa's economy and trade, multiple African countries have begun to actively promote relevant monetary arrangements with China, and the internationalization of the RMB has accelerated in Africa.
In fact, since the beginning of this year, there have been continuous new news about the internationalization of the RMB. From surpassing the euro to become the second largest currency in Brazil's foreign exchange reserves, to Argentina using the Chinese yuan for the first time to repay its foreign debt; From Pakistan's first payment for imported Russian crude oil in RMB to China's completion of the first order of imported liquefied natural gas settled in RMB... The international reserve currency, payment currency, and other functions of the RMB continue to strengthen.
At present, the internationalization process of the RMB is accelerating, "said Wang Youxin, a senior researcher at the Bank of China Research Institute, in an interview with Securities Daily. Major emerging market countries, including Brazil and Argentina, have announced the adoption of local currency or RMB settlement in cross-border transactions with China, which reflects a significant increase in the market recognition and international acceptance of the RMB.
Multiple data also reflect the increasing trend of cross-border use of the RMB. The latest data from the State Administration of Foreign Exchange shows that in June this year, the proportion of RMB in cross-border payments by domestic non bank departments increased to 49.81%, surpassing the US dollar for four consecutive months. At the same time, the latest data from the World Bank Financial Telecommunication Association (SWIFT) also shows that in June of this year, in the global payment currency ranking based on amount statistics, the RMB remained the fifth most active currency in the world, accounting for 2.77%. From January to May of this year, this proportion showed a continuous growth trend.

Wang Youxin believes that since the beginning of this year, the international payment share of the RMB has steadily increased, especially in China's cross-border settlement, surpassing the US dollar for the first time, becoming the preferred currency in China's cross-border settlement, and also one of the outstanding manifestations of the accelerated internationalization process of the RMB. At the same time, many emerging market countries have also begun to increase RMB foreign exchange trading or issue more RMB denominated bonds, enhancing the position of the RMB in cross-border investment and financing and liquidity management.

From the perspective of foreign trade enterprises, what are the impacts of orderly promotion of RMB internationalization? Zheng Lei, Chief Economist of Samoye Cloud Technology Group, analyzed to reporters that the proportion of the Chinese yuan in trade settlement continues to rise. For export enterprises, using Chinese yuan for pricing or settlement can avoid foreign exchange risks and losses.
In Wang Youxin's view, directly using RMB for investment and financing activities can reduce currency mismatch and maturity mismatch between assets and liabilities, improve the quality of enterprise assets and liabilities, and reduce the risk of foreign currency debt default.
Tian Lihui, Dean of the Financial Development Research Institute at Nankai University, believes that more importantly, the internationalization of the RMB can promote the internationalization of Chinese enterprises, promote their participation in the domestic and international dual circulation, and continuously improve their pattern, vision, and global competitiveness.
Regarding how to orderly promote the internationalization of the RMB in the future, Wang Youxin stated that on the one hand, it is necessary to further simplify the investment process for foreign investors entering the Chinese market and provide support for international investors to hold and allocate RMB assets; On the other hand, we should continue to promote innovation in RMB investment and financing products in the offshore market, create a RMB fund pool and a good ecosystem in the offshore market, and provide more convenience for overseas entities to use RMB.
Tian Lihui believes that it is necessary to continue promoting economic and financial reform and opening up, and create a legal, market-oriented, and international business environment. At the same time, it is necessary to continue to actively participate in global financial governance reform and vigorously enhance China's voice in international monetary and financial affairs.