The Central bank of China is planning a big push for yuan globalization. The Peoples Bank of China has announced that it will seek cooperation from other countries in expanding the use of Chinese currency.
Compared to the US dollar or Japanese yen, China’s yuan has not been a highly sought after unit in trading circles.
In a statement, posted on the People’s Bank of China website, the central bank made these comments. The comments assume significance in the wake of many factors. One is the timing, prior to the forthcoming 2016 annual report on yuan globalization.
Yuan’s share of global payments fell to 1.72 percent in June, which was the lowest since 2014. Another concern was that the currency’s deposits in Hong Kong declined to three-year low, reports Bloomberg.
The PBOC statement claimed that infrastructure for yuan globalization has improved, cross-border use under the current account increased and channels for yuan financing expanded.
The central bank also plans to increase the use of the yuan as a reserve currency. It said International Monetary Fund will be adding the yuan to its Special Drawing Rights in October.
The significance of the statement regarding yuan globalization doubles as it comes almost a year after China devalued the currency and sent shockwaves in global financial markets and tumbled stock and commodity markets.
Gold Price Up, Dollar Weak
Meanwhile, gold posted gains on Wednesday following a downturn in the US dollar. The mid-week weakness of greenback boosted the precious metals prices.
December Comex gold was up to $1,362.50 per ounce. September Comex silver inched up to $20.485 an ounce. The US dollar index traded lower following a weak US productivity report on Tuesday.
The productivity report recorded the longest slide since the late 1970s and will haunt the US economy’s long-term prospects. It may also douse Federal Reserve official’s eagerness to raise interest rates, according to Forbes.
In precise terms, nonfarm business productivity—the goods and services produced each hour by American workers decreased 0.5 percent in the second quarter as working hours increased faster than output, the Labor Department said. It was the third consecutive fall in productivity, the longest since 1979. In the second quarter, productivity was down 0.4 percent from a year earlier.
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