Multi-national banks keep claiming that 2013 is the year of the renminbi. Skeptics now believe this is far more than a clever marketing scheme.
It hasn’t really been a secret that China was working diligently on replacing the U.S. dollar with its own currency.
China’s government enabled a conduit for offshore trading of its currency and it’s had a few good years so far. Currently, the amount that can be invested by foreign institutions in domestic bonds and equity is limited to 70 billion yuan (roughly $11 billion).
However, the regulator has indicated that another 200 billion yuan will soon be available for investors. Obviously, for every action, there is an equal and opposite reaction. This time, that means the pressure will fall onto the U.S. dollar.