Experts say enhancing market liquidity, product categories will boost wider use

With a more optimistic appreciation outlook in the medium-term horizon, the pace of renminbi internationalization is also gaining traction incrementally. Industry leaders suggest that increased liquidity and a broader range of financial products are essential to elevate the RMB’s status as an international investment and reserve currency.

In 2025, the RMB exchange rate appreciated 4.2 percent, ending a three-year depreciation trend from 2022 to 2024 and marking the largest annual increase in five years.

The country’s stable economic fundamentals, expanding trade surplus, and continued interest rate cuts in the United States have created favorable conditions for appreciating the RMB. Additionally, the flare-up of geopolitical tensions has prompted global capital flows into gold and RMB-denominated assets.

Looking ahead, global financial institutions expect the RMB to appreciate up to 6.92 per US dollar by the end of this year. The currency is expected to exhibit gradual — albeit staccato — appreciation; a sustained and sharp one-sided rise is unlikely.

Greater cross-border flows 

Market participants say that the RMB’s journey toward internationalization is entering a new phase, marked by rapidly strengthening cross-border flows.

A report titled “RMB in Motion for Corporates”, conducted by Standard Chartered Group and released in April, based on interviews with some 300 global enterprises across 19 sectors, revealed broader RMB adoption by companies at various stages of development.

Southeast Asian companies’ adoption is largely driven by supply chain and procurement activities, while Middle Eastern and African clients’ usage is concentrated in energy and infrastructure trade corridors. In Europe and the Americas, capital market issuances and selective funding diversification are emerging as notable entry points, the report said.

It added that 24 percent of surveyed corporates already with RMB exposure said they plan to increase RMB financing in the next three years.

“In a multipolar financial system, RMB is a natural choice of currency. This is a diversified currency option that can bring more risk management tools for companies,” said Karen Ng Nga-sze, managing director and head of China opening and RMB internationalization at Standard Chartered Bank (Hong Kong).

Some enterprises’ balance sheets have RMB-denominated assets and their accounts payables and receivables are also denominated in RMB, making them more willing to adopt that currency for payment settlement, she added.

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In February, the People’s Bank of China doubled the RMB Business Facility (RBF) to 200 billion yuan($29.3 billion), enabling banks in Hong Kong to expand RMB funding for trade finance, capital expenditure, and working capital term loans through a currency swap agreement with the Hong Kong Monetary Authority.

Ng said the RBF extension boosts policy confidence among companies, and enables financial institutions and global companies to adopt the Shanghai Interbank Offered Rate (SHIBOR) as the base rate for obtaining RMB liquidity.

“We expect that in the syndicated loan market, some banks may be likely to conduct some tranches of offshore RMB financing deals based on SHIBOR,” Ng said.

She added that this will diversify pricing and enhance transparency for corporations referencing SHIBOR as the cost of capital when obtaining RMB liquidity.

HK as a new hub

China’s 15th Five-Year Plan (2026-30) underscores a clear vision to expand the RMB’s global footprint, with the Hong Kong Special Administrative Region poised to play a pivotal role in this process.

Ng said Hong Kong needs to build a liquid RMB bond market with diversified issuers, investment grades and term tenors to attract global capital flows. “The liquidity of the city’s secondary dim sum bond market is not ample while the market benchmark is not active.”

She added, “The diversity of RMB bond issuers is important. More RMB bond issuances in Hong Kong by private companies, along with the SAR government, are essential so that the market can develop an RMB bond market yield curve through enriching the credit profile.”

With a comprehensive yield curve, Ng said the market can develop RMB-denominated ETF funds and other financial products, and insurance companies can also create new insurance products when they can invest in long-term RMB denominated bonds. 

Another strategy is to develop more RMB-denominated financial products. “For promoting the RMB as the reserve currency, the market needs to develop more financial products that can elicit global investors’ need for RMB as an investment currency,” Ng said. “Structured prod ucts denominated in RMB are still not enough in the market to raise the attractiveness of holding the RMB.”

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Betty Wang, lead economist at Oxford Economics, a United Kingdom-based think tank, said the trajectory of RMB internationalization is likely to be gradual and incremental — constrained by factors such as the mainland’s high domestic savings rate and external realities like market liquidity and institutional credibility.

“In the longer term, the currency’s global attractiveness depends on whether the mainland has improved its policy transparency and has lowered its structurally high saving rate,” Wang said.

She said she expects Hong Kong and Shanghai to continue to function as complementary offshore and onshore RMB hubs, providing the market infrastructure, liquidity pools, and regulatory frame works to denominated support RMB investment products and enhance cross-border usage.