Internationalisation of Chinese currency

China, a large importer of Iranian oil, is likely to use its petro-yuan to bypass payment in dollars. This may offer India a possible solution

Shyam Saran

The internationalisation of the Chinese currency, the renminbi (RMB), has been one of the key objectives of Chinese economic reform. Progress was steady up until August 2015 when a cumulative 3 per cent devaluation, as part of exchange rate reform, roiled the financial and the stock markets and triggered capital flight. This led to a reversal, at least temporarily, of current account convertibility, re-imposition of some controls on capital flows, including repatriation of profits and restricting overseas direct investment (ODI) by Chinese conglomerates. These measures also had a dampening ...