Our proprietary indicator remains at 49.0 in May. We continue to look for the renminbi to weaken, but acknowledge that a number of factors (particularly hot money flows and the internationalisation of the currency) are helping it to appreciate.
Our proprietary indicator has risen from 48.0 in March to 49.0 in April. This means that we are still expecting that renminbi will weaken, but have reassessed the factors that are causing the currency to rise.
The internationalisation of the renminbi has regained momentum this year, thanks to improving appetite for the Chinese currency and the launch new policy initiatives by the authorities in Beijing.
As of early February, the indicator remains at 48.0. The contributions from each of the eight factors are the same as they were in early January. Seasonal factors such as the corporate need for cash in mainland China in order to pay bonuses to workers have boosted the currency. So too have two other factors, hot money inflows and the general internationalisation of renminbi.
Liquidity in the offshore renminbi (CNH) markets has improved significantly in the month of January on the back of strengthening appetite for the renminbi. As a result, interest rates in the offshore forwards markets has fallen quite dramatically over the past few weeks despite announcements by the authorities in Beijing that China may further liberalise renminbi FDI.
An integrated research service from the Financial Times that provides premium, exclusive analysis and predictions on China investment themes.
Using a dedicated FT team of specialists in China and the UK, it taps Chinese sources from the grassroots to the political elite to forecast key trends and issues. It conducts proprietary research to supply its own insights into industry trends and consumer sentiment. By filtering the work of the best Chinese analysts and academics, it keeps you current on key debates as they unfold inside mainland China. Its broad aim is to help the professional investor navigate through the Chinese investment landscape.