RMB Will Become A Dominant Currency Into The Basket Five Years After The Test.

Since October 1st, the RMB has formally joined the basket of special drawing rights (SDR). This is a landmark event in the Chinese economy, which means that the internationalization of RMB is accelerating.

What kind of impact will it bring? RMB's accession to the SDR will bring great benefits to China's foreign trade and investment. Foreign trade and investment will gradually increase RMB pactions in the future, which will be convenient for Chinese enterprises and reduce exchange rate losses, thus improving China's efficiency as an export-oriented economy.

Cao Yuanzheng, CO head of the Lujiazui International Financial Research Institute, believes that the exchange rate is a relative value. That is to say, if the dollar appreciates and the renminbi appreciates, the appreciation of the US dollar will be faster than the appreciation of the renminbi, which means the depreciation of the people's currency.

From the point of view of interest rates, the higher interest rate of the US dollar will mean that a lot of money will flow into the US dollar, while the interest rate of the RMB is going down, and many of the funds may go to the us to invest in US dollars from China.

Cao Yuanzheng said that joining the SDR will certainly push forward the marketization reform of RMB exchange rate. In the future, the exchange rate will be determined by market supply and demand. It is just a normal fluctuation. Just like stocks, the number of people who buy more stocks will rise.

When we hear about exchange rate fluctuations, there are various rumors in the market. In fact, it is an overreaction.

If a person is not healthy, mild changes in temperature can lead to cold and cough, but people are much outdoors, healthy, and less sensitive to temperature changes.

By the same token, exchange rate fluctuations will not have any dramatic impact on China's economy.

Xu Bin, Professor of economics and finance at CEIBS believes that after the RMB is included in the SDR basket, the external demand of RMB will rise to a certain extent, which makes the RMB have a certain appreciation trend.

China can take advantage of joining the SDR's east wind to create some RMB products (stock market and bond market products) that foreign investors can invest in. Foreign investors will definitely invest in RMB when they come to invest, and the value of RMB will go up.

Xu Bin said that through the financial innovation to launch more RMB products in the stock market and bond market, I believe this is the best strategy to deal with the pressure of RMB depreciation.

If the US and the euro area investors exchange Renminbi, it will undoubtedly reduce the depreciation of the RMB and raise the international holding rate of RMB so as to raise the international status of the RMB.

It is a long way to go for the renminbi to become the goal of the international reserve currency.

But only by achieving this goal can China's economic and financial status be able to match its economic volume.

He suggested that Chinese entrepreneurs should learn more about how to use foreign exchange tools to hedge risks.

When the RMB exchange rate was relatively stable, there was nothing to hedge against.

But in the future, the fluctuation of RMB exchange rate must be strengthened. Enterprises should learn to hedge exchange rate fluctuations with existing foreign exchange instruments, including options and swaps.

Zhang Yimin, a professor of finance at the China Europe International Business School, believes that the renminbi's accession to the special drawing right indicates that the renminbi has been recognized. Before that, the renminbi was only China's currency.

Although China's foreign trade ranks first in the world, most of those trade are settled in US dollars.

RMB is only used domestically, but not internationally.

China's accession to the SDR, in theory, can be held by all central banks as foreign exchange reserves, and the renminbi has been internationally recognized.

In a more profound sense, the accession of the renminbi to the SDR will further accelerate the process of RMB internationalization, changing the way that RMB internationalization mainly depends on currency swap between the central banks.

At the end of 2015, South Korea first issued a 3 billion Yuan Panda debt in China. This year, Poland is also planning to issue Renminbi denominated panda debt in China.

In addition, in June this year, the Treasury's 3 billion yuan treasury bonds were listed on the London Stock Exchange, the world's first domestic currency sovereign bond issue overseas.

More importantly, in August of this year, the world bank issued a 500 million SDR valuation of Mulan debt in China, which is the world bank's first SDR bond raised in Renminbi.

There is no doubt that this will greatly enhance the status of RMB as the world currency.