One year after the launch of direct trading between the renminbi and
Japanese yen, the daily trading volume between the two currencies has
reached 50-100 billion Japanese yen on the Shanghai market and
15 billion yen on the Tokyo market, a combined volume double that of
a year ago, according to China’s Ministry of Commerce.
The markets for direct trade of the renminbi and yen were set up in
Shanghai and Tokyo in June last year, removing the intermediary role
of the US dollar. Up to now, 300 Japanese enterprises have opened
renminbi trading accounts at the three Japanese banks with the largest
reminbi-denominated business, including 100 at Mizuho Bank, which now
boasts 10 billion yen of trading between renminbi and yen, 70% of the
volume on the Tokyo market.
According to the Chinese Communist Party mouthpiece People’s Daily,
trade between the yen and renminbi is related mainly to corporate trade
and investment settlement, as well as outward remittance of profits and
exchanges of expenses. Meanwhile, the rapid devaluation of the yen has
induced interbank trading with the purpose of benefiting from forex
trading. In addition, higher deposit interest rates and a rising exchange
rate have prompted many in Japan to hold renminbi.
People’s Daily notes however that the number of Japanese enterprises with
renminbi accounts is dwarfed by the number of Japanese enterprises in
China, which tops 20,000, and the volume of renminbi-yen trade on the
Shanghai market during the first three months of this year was only one
fourteenth the volume of trade between the renminbi and the US dollar.
According to Japan’s Ministry of Finance, half of China-Japan trade is
settled in the US dollar at present, followed by the yen with 30%-40%,
with renminbi accounting for a mere 1%.
A senior executive at Mizuho Bank notes that on the interbank trading
market in Tokyo, only 10%-20% of clients are taking part in renminbi
trading, adding however that the percentage will grow along with the
gradual liberalization of renminbi in overseas markets.
Cheng Yulin, a Chinese financial expert, said that in order to raise the
proportion of the use of the renminbi and yen in their trade settlement,
the two nations should expand the channels of fundraising and trade
settlement in their respective currency for investment, financing and
serviced trade in each other; develop more financial products denominated
in their respective currency in each other’s market; and jointly create
bond markets for infrastructure in East Asia and other countries on the
Another executive from Mizuho Bank says currently renminbi-denominated
products available on the Japanese market are quite limited and most of
the renminbi assets held by Japanese financial institutions flow to the
offshore market in Hong Kong to seek various investment opportunities.
In the future, Japanese banks will join hands with other financial
institutions in developing more renminbi-denominated products and if
China can issue renminbi-denominated government bonds in Japan, they
will be welcomed by Japanese investors.