On August 14, Bank of China revealed its Cross-border RMB Index ("CRI") for June 2014, which showed a reading of 246 points, on par with the previous month, and signs of consolidation. RMB maintained a momentum of net outflows during the cross-border circulation process, only with the pace slowing down somewhat. With RMB's overseas circulation levels enhanced, the scope of its use abroad has continued to grow, particularly in the European and American markets.

BOC's CRI for June 2014

Cross-border RMB use under direct investment became more active. From January to June, cross-border RMB settlements under direct investment increased by 156% year on year, remarkably higher than those under current account in the same period. That is to say, direct investment contributed even more to the cross-border use of RMB.

Net export of RMB experienced a moderate slowdown. By the "cross-border outflows, circulation abroad, and cross-border backflows" indicators, the CRI for June showed a slight drop in the activity of the first indicator, a moderate rise in the activity of the second, and a minor uptick in the activity of the third, putting it on the same level as the previous month on the whole.

The RMB export capacity under direct investment remains to be further boosted. In June, outward RMB direct investment (ODI) rose by 59% month on month, 8 percentage points higher than foreign RMB direct investment (FDI) in the same period. However, the gap between yuan-denominated ODI scale and FDI scale expanded from RMB46 billion in May to RMB68 billion in June. Overall, the gap between China's ODI and FDI gradually shrank, but the RMB export capacity under ODI is yet to be enhanced further.

With the activity of cross-border RMB use notably raised, the gap between RMB and major international currencies has been reduced. In the first half of 2014, CRI displayed an upward consolidating trend. The use of RMB in cross-border trade settlements steadily rising, so did its use in cross-border service trade and direct investment, which laid a more solid foundation for its cross-border use. In June 2014, the activity indexes for cross-border use of USD, EUR, GBP and JPY were 1471, 976, 662 and 412 respectively, representing a change of 2.41%, -0.52%, -1.86% and -2.31% as compared with the end of December 2013. CRI rose by 7.89% during the same period, pointing to a gradually narrowed gap by the same measure between RMB and major international currencies.

Attachment: CRI for June 2014.pdf



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