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Bank of China, one of China’s main state-owned lenders, has opened up renminbi trade to American firms and individuals in a move that will strengthen the presence of the currency on the world front, the New York Times reports. The Bank of China announced on the website of its New York branch that trading firms and individuals could now open accounts in the Chinese currency. Currency trading in the renminbi was already possible at other banks, but the allowance by a state bank points to a shift in official policy. China started a renminbi settlement system in July that allowed cross-border trade in Hong Kong, but limited how much the currency could be exchanged. However, the yuan was made more flexible and is now allowed to move as much as 0.5% each day. The move by the country’s central bank is a significant indicator that China is pursuing te strategy of initiating the renminbi as an international exchange currency. Robert Minikin, senior currency strategist at Standard Chartered in Hong Kong, said, “China sees the global financial system as too US-centric and dollar dependent. That created issues during the financial crisis.” He said China is moving away from dollar dependence: “Conditions are in place for sustained yuan appreciation against the US dollar.” Minikin predicts that the yuan will increase by 6% this year, to 6.20 renminbi per dollar. With concerns of high inflation in China, an appreciated yuan could help the country soften its imported inflation by making …
