Currency of the moment

Cath Henry. Photo / Supplied

If there is to be a rival to the dollar as the world's reserve currency in the 21st century, it surely must be the Chinese renminbi (RMB).

As China seeks to close the mismatch between the global presence of its economy and that of its currency, the world may be looking at a financial revolution of epic proportions. As a strategic priority, Chinese policymakers have introduced multiple accommodative taxation, trade finance and capital account measures to facilitate the RMB internationalisation process. More importantly, cost savings on foreign exchange transactions and the appreciation of the RMB should increasingly encourage traders and investors, in and out of China, to switch to the currency at the dollar's expense.

For New Zealand businesses, the opportunities arising from the internationalisation of RMB are immense, which is why HSBC has spent the past six months undertaking a national roadshow to educate and inform New Zealand businesses on how they can conduct business using the RMB. Briefing sessions have been held in Auckland, Wellington, Invercargill, Dunedin, Nelson and Napier and further seminars are planned for later in 2011. At each session we have had up to 70 representatives from large- and medium- sized enterprises keen to understand how they can conduct business in RMB and the advantages it might bring.

- Cath Henry is Head of Global Payments and Cash Management at HSBC (NZ).