Nigeria Buying ‘Well-Managed’ Yuan as Thailand to Diversify: China Credit
By Fion Li - Sep 9, 2011
Central banks from Thailand to Nigeria plan to start buying yuan as China allows conversion of the currency for investment while slowing global growth spurs the U.S. and Europe to keep interest rates below 2 percent.
Bank of Thailand opened an office in Beijing to assess investments in the nation, Deputy Governor Atchana Waiquamdee said in an interview yesterday in Bangkok. Nigeria will shift 10 percent of its foreign reserves into yuan as soon as possible, on bets the currency will appreciate because of China’s “well managed” economy, central bank Governor Lamido Sanusi said in a Sept. 7 interview in Hong Kong. Philippine Finance Secretary Cesar Purisima said in an interview in Xiamen, south-eastern China, on Sept. 3 that buying yuan may be “prudent.”
Investment has become easier for central banks as issuance of yuan-denominated bonds in Hong Kong more than tripled to 115 billion yuan ($18 billion) this year and institutions were granted quotas to invest onshore. The HSBC Offshore Renminbi Bond Index shows the notes’ average yield reached a record-high 3.22 percent on Aug. 29, three days before the rate on two-year U.S. Treasury notes sank to an all-time low of 0.18 percent. The yuan rose 6.2 percent against the dollar in the past year, outperforming the currencies of Brazil, India and Russia.
“One of the steps to internationalize renminbi is to allow more central banks to hold renminbi as part of their reserves,”Brian Baker, chief executive officer at Pimco Asia Ltd., said in an interview yesterday in Shanghai, referring to the yuan by its Chinese name. The success of this drive depends on “how quickly they develop the financial markets so people have something to invest in,” he said.
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