Capital Markets, Cash trade and treasury, China, Foreign Exchange, Hong Kong - Tuesday, November 1, 2011 13:44 - 0 Comments

A half-open door

CFA Institute Magazine, November 2011

In the offices of Hong Kong’s banks and fund managers, a transformation that will shape the world economy is in its early stages. This is the slow but steady process of turning the Chinese renminbi (RMB) from a heavily restricted currency to one that is open and internationally traded. The endgame, many believe, is an international reserve currency to rival the US dollar – and is perhaps not far away.

China today is at a halfway house between restriction and openness: a middle ground in which the current account is open and the capital account closed. It’s a situation that has created some quirks – one currency behaving in a wildly different way depending on whether it’s onshore or offshore – and a host of opportunities besides. The big topic of discussion in Hong Kong, and elsewhere in Asia, is where it goes from here.

To see this article as it ran, click here: Half open door

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