Renminbi as legal tender Zimbabwe uses the currency of migrant workers in China as its legal tender.
A few days ago, Zimbabwe proposed to use RMB as legal foreign currency. Why did Zimbabwe suddenly make such a decision?
It turns out that the scale of trade and investment between the two countries has been expanding in recent years. The Vice President of Zimbabwe said that he can provide investment advice to China in key economic fields and special economic zones in Zimbabwe, including the development of energy, road and railway networks, tourism, manufacturing, information and communication technology, etc. It is more convenient to invest in RMB.
Zimbabwean Finance Minister Chinamasa disclosed that the central bank allocated US$ 2,654,380,000 for the currency exchange operation, which is scheduled to be completed within one month. People can exchange money in designated financial institutions, but banks will not automatically convert residents' original Jinyuan accounts into US dollar accounts.
Zimbabwe will be the only country in the world that can use nine foreign currencies as its national currency at the same time, but China does not print paper money. This year marks the 35th anniversary of the establishment of diplomatic relations between China and Tianjin, and Sino-Tianjin relations will also reach a new level. Zimbabwe's use of China immigrant currency as its legal tender shows its trust and friendship with China.
According to The Herald, during his visit to Beijing on July 8th, Zimbabwe's Vice President Mnangagwa proposed to use China's currency RMB as the legal tender of Zimbabwe.
Renminbi as legal foreign currency
A senior official of Zimbabwe's vice president's office who asked not to be named made the above remarks. The official also revealed that the Vice President of Zimbabwe indicated that he could provide investment advice to China in key economic sectors and special economic zones in Zimbabwe, including the development of energy, road and railway networks, tourism, manufacturing, information and communication technologies, etc.
This year marks the 35th anniversary of the establishment of diplomatic relations between China and Tianjin. In recent years, the scale of trade and investment between the two countries has been expanding. In 20 14 years, the bilateral trade volume reached 124 billion USD. China has been the largest investor in Zimbabwe for many years, with 20 13 investing more than 600 million US dollars in Zimbabwe.
The probability of including RMB in SDR is reduced to less than 50%.
Mirza Baig, chief foreign exchange and interest rate strategist of BNPP Paribas, wrote in his latest report last Friday (July 10) that the probability of RMB being included in the Special Drawing Rights basket (SDR) of the International Monetary Fund has dropped from 70% previously estimated to less than 50%, because the current China government is mainly focused on the stock market and may be distracted from promoting reform and market liberalization.
It had expected that the Bank of China (PBOC) would announce new measures to merge the onshore and offshore markets, which might convince the International Monetary Fund. China tried to take measures to curb the stock market crash, which made the IMF more cautious about whether to include the RMB.
The bank pointed out that the stock market crash will inevitably affect the entire financial system, and it is difficult for the currency to be immune. Therefore, the market began to seek cheap "macro hedging" trading strategy. At present, the market strategy of "macro hedging" by buying USD/offshore RMB is invalid. History has proved that when the situation is bad, the China government can simply peg the RMB to the US dollar.