The yuan is higher than it has been in more than two years, and foreigners are suddenly showing interest again in holding the Chinese currency.
Earlier in the decade, Beijing brought the yuan into the spotlight through an aggressive effort to take the currency overseas through swap agreements with foreign central banks and offshore bond issuances denominated in the currency.
This time, foreigners are coming to China to get yuan. Chinese assets stand out at a time interest rates in much of the world are at zero or below and many currencies are sagging. Beijing has meanwhile been making access easier for foreign buyers.
Yet for all Beijing’s ambitions of cracking the hegemony of the U.S. dollar in the face of Trump administration sanctions, the yuan still has a long way to go. While this week’s meeting of the Communist Party Central Committee looks likely to take up the cause of yuan internationalization, the currency will not be taking the greenback’s place on the world scene any time soon.
Available data suggests that after plunging abruptly in 2015, international use of the yuan started to recover just last year. This year, foreigners have been snapping up yuan to put into domestic Chinese bonds and stocks, with holdings of such bonds alone rising by more than a quarter to 2.8 trillion yuan ($419.3 billion).