LONDON, Dec. 15 (Xinhua) -- London saw a rapid growth of its foreign exchange activity in the Renminbi, or RMB, products in the first half of 2014, along with the RMB deposit reported its record high. But the total trade financing amount declined slightly on year-on-year basis, said the City of London Monday.
FX ACTIVITY JUMPS
The RMB denominated trade financing in London increased by 79 percent to around 26.5 billion Chinese yuan (about 4.3 billion U.S. dollars), or RMB, in the first half of 2014, compared to the second half of 2013.
But it was lowered than the 27.9 billion RMB in the same period of 2013, said the City in a report entrusted to and authored by Bourse Consult.
Export financing was 7.3 billion RMB in H1 2014, slightly lower than the 7.5 billion RMB in H2 2013. Import financing increased dramatically from 6.5 billion RMB in H2 2013 to 18.4 billion in H1 2014, while letters of credit dwindled from 876 million RMB to 807 million RMB over the same period, figures showed.
Overall foreign exchange (FX) activity in RMB products, however, increased very rapidly in H1 2014 when compared to the H1 2013, with total deliverable products climbed from 15.6 billion U.S. dollars to 42.4 billion dollars, and non-deliverable products expanded from 6.8 billion dollars to 12.2 billion dollars, data showed.
Specifically, deliverable products of spot FX, forwards, FX swaps and FX options all increased substantially over the same period. While non-deliverable products, which includes forwards, FX swaps and FX options, also grew rapidly.
Total RMB deposits in London at the end of June 2014 reached a new high of 25.4 billion RMB, surpassing by 74 percent the 14.6 billion RMB recorded at the end of 2013, data also showed.
Reviewing the developments of London's RMB business in 2014, the City of London concludes in the report:" The most significant policy-led event during the period has been the appointment of China Construction Bank to act as the RMB clearing bank in London."
"A further significant development is the decision of the UK Government to issue an RMB denominated bond. The issue will support development of the offshore RMB bond market, which at present remains relatively small, and assist RMB market participants in further developing that market," it noted.
The British Treasury issued the world's first non-Chinese sovereign bond in the Chinese currency, with amount of three billion RMB and maturity of three-year, this October.
Andrea Leadsom, Economic Secretary to the Treasury of Britain, commented in a statement:" RMB business in London continues to go from strength to strength."
"The rise of China's currency is one of the most important developments in international finance for a century. London is a central part of this story, and I am sure that the scope, depth, and flexibility of our financial markets will ensure that London's position as a leading RMB hub continues to thrive," she said.
Mark Boleat, Policy Chairman at the City of London Corporation said in a statement:" These new figures released today demonstrate the progress that has been made in the RMB markets in the UK, which echoes the overall development of the currency which is now the 7th most used world payments currency. This has been driven by market demand, and supported by the Chinese and UK authorities."
"We believe that further expansion of cross border RMB usage around the world will lead to the eventual goal of the RMB becoming a mainstream global currency for trade and investment," he added. (1 U.S. dollar = 6.2 yuan)