COFER data through December 2023:
Figure 1: Foreign exchange reserves in JPY (blue), AUD (light blue), CAD (green), CNY (red) relative to total foreign reserves. Source: IMF copperAccessed 18 June 2024 and author’s calculations.
The highest CNY was 2.6% in Q1 2022 and the latest CNY was 2.1%.
In terms of daily foreign exchange turnover, the CNY rose through April 2022.
Figure 2: The April foreign exchange turnover rate is either 1.00 in CAN (blue square), AUD (light blue circle), CAD (green triangle), or CNY (red square). source: BIS Triennial Survey, 2022.
What happens to sales after 2022 is an interesting question. This is especially true considering the rapid increase in trade between Russia and China, resulting in invoices/payments being made in CNY. Below are CSIS estimates billed in RMB from 2011 to the first quarter of 2023.
source: DiPippo and Fallazzi (2024).
This last graph shows how the CNY may lose its popularity as a reserve or vehicle currency while also being used as an international currency due to China-dominated trade. However, the gap between the financial and trade spheres reinforces the proposition that investors should not invest as long as they are suspicious of the Chinese government’s intentions regarding political risks (including tightening capital controls). It is expected that using CNY as a reserve currency will yield more profits.
