Posted on 18 Aug 2015
“Renminbi used to be seen as the currency that didn’t really move much and has relatively low volatility compared with many other currencies globally. The longer term message is that the volatility for other Asian currencies will be rising over time,” he told a media briefing after the HSBC Forum on Renminbi and China’s Global Future.
Mackel, who opines that the quantum of the recent depreciation of the renminbi counts more as a weakening rather than a devaluation, does not foresee the weakening of the renminbi triggering a currency war though, as other countries cannot solely depend on currency depreciation to grow the economy.
“The global economy is still facing headwinds, so the countries may not benefit from the weakening of currencies,” he stressed.
The ringgit continued to depreciate yesterday to settle at 4.1065 against the US dollar as at 5pm.
HSBC Malaysia head of global markets Alvin Kong noted that a weaker renminbi, however, could benefit Malaysia as lots of Malaysian goods are sourced from China. “A weaker renminbi aligns itself more to how some other Asian currencies have been performing.”
HSBC Malaysia head of global trade and receivables finance Vincent Sugianto believes that with the rise of the renminbi on the global platform, more Chinese companies could be switching towards settlement in renminbi instead of US dollar.
“Businesses stick to the US dollar simply because they know the renminbi is strengthening and the US dollar you have to pay is lower ... but with the current fluctuation, it’s not necessary like that,” he explained.
However, Kong acknowledged that it may not be easy for commodity players to switch from US dollar to renminbi as they also need to face underlying commodity price movements.
“In order to propel the conversion from US dollar to renminbi, I would say other developments need to take place, which involve the commodity hedging market to participate in denominating the hedged products into renminbi,” he said.
HSBC estimates 50% of China’s trade will be settled in renminbi in five years’ time, from 30% currently. It also expects trade between Malaysia and China to reach US$160 billion (RM648 billion) by 2017 compared with US$102 billion (RM413 billion) in 2014.
HSBC global head of global trade and receivables finance Stuart Tait, meanwhile, believes medium- to long-term growth prospects are still good despite short-term softness in trade between the two countries.
“We expect exports from Malaysia to China to grow about 8% on an annualised basis between now and 2020, and then rising to about 12%. On the imports side, from China, we estimate it will grow at an annualised rate of 9% between now and 2020 and rising to 14% from 2020 onwards,” he said.
