21 September 2016

What is RMB? Why would you trade in it?

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The RMB is the fastest growing global currency. As of March 2016, SWIFT ranked the RMB as the second most used trade currency (in terms of global issuance of letters of credit), and the fifth most used global payments currency.

Trading in RMB presents many potential benefits for both importers and exporters.

When importing from China, conducting trade in RMB typically removes the FX margin added on top of the purchase order. This alleviates the need for Chinese exporters to impose currency conversion costs and creates greater transparency.

Furthermore, agreeing to settle in RMB can improve supplier relationships and potentially open doors for future discounts.

For businesses exporting to China, RMB can act as a competitive tool with which to win new business, as trading in the same currency saves the importer on FX costs and mitigates currency risk. Settling in RMB also allows exporters to diversify their currency positions.

What’s RMB? Why would you trade in it?

 

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