Economist seminar - Risto Rönkkö (Tampere University): Global role of the RMB as an anchor currency

Seminars

Economist seminar - Risto Rönkkö (Tampere University): Global role of the RMB as an anchor currency

Co-author: Kari Heimonen (University of Jyväskylä)

Abstract

This study endeavors to examine the weight of the Chinese renminbi (RMB) in emerging and advanced countries exchange rate policies, i.e. the RMB role as an anchor currency. The issue of the RMB role as a pegging currency has become topical for two reasons. First, China has abandoned its US dollar (USD) peg. Secondly, the increase of China’s global economic role creates incentives for other countries to peg their currency to the RMB.  We utilize and modify the Ahmed (2021) approach to estimate basket weights in exchange rate policy for sixty countries. Our preliminary results suggest that the RMB weight in exchange rate policies is still limited although it has increased a little bit over the recent years. This contrasts with some of the earlier research. Our plan is to go further find potential determinants for the RMB weight in exchange rate policy, especially the role of international trade and financial linkages with China.

 

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