Deutsche Bank, the largest provider of liquidity to global and Asian currency markets*, has today outlined its 2013 forecasts for key performance indicators in the offshore Renminbi (RMB) market.
Looking ahead, Deutsche Bank strategists expect that 2013 will be a year very much focused on addressing offshore RMB liquidity supply concerns through further capital account liberalization, and anticipate a range of exciting policy and market developments ahead. In addition, the bank expects a further widening of the USD/CNY spot intraday trading band, likely to +/- 2%, sometime in the year ahead.
Deutsche Bank forecasts that in 2013 the RMB will appreciate versus the US dollar (USD) by roughly 2-3%, and that RMB cross-border trade settlement will increase by roughly 30% to RMB 4 trillion, or approximately 15% of China’s global trade volume.
With steady potential growth of the RMB business in offshore centres apart from Hong Kong (London, Taiwan, Singapore), the bank expects daily aggregate offshore RMB trading volume to rise to USD 2.5-3 billion. The total offshore deposit base is forecasted to reach RMB 1.25 trillion by end-2013.
Net issuance of offshore RMB bonds/certificates of deposit is expected to hit RMB 210 billion, off of a forecast of gross new issuance of RMB 340 billion. The bank projects that the total return of CNH bonds tracked by the S&P/DB ORBIT index will be roughly 4.25% in 2013 for CNH-based investors, and 6.25-7.25% for USD-based investors.
Deutsche Bank Greater China Rates Strategist Linan Liu commented, “The offshore RMB market continued to see stable but solid growth in 2012. We are looking forward to the year ahead, which we expect will bring a number of key liberalizations and policy announcements that will yet further internationalize the RMB and solidify its growing importance in global currency markets.”
Deutsche Bank is committed to the development of the RMB through all facets of foreign exchange, capital markets, credit trading and transaction banking. The bank was the first to allow electronic execution via its online trading platform, Autobahn FX, currently offering live 24x5 CNH pricing. Deutsche Bank also launched the first investable CNH bond index, and was among the first to execute onshore RMB FX option trades, CNH cross-currency swaps, and CNH forwards. Deutsche Bank’s dedicated CNH trading desk manages a significant amount of daily trading volumes, while regular, dedicated research (Deutsche Bank’s CNH Market Monitor and China Market Perspectives) serves to keep investors and corporates informed on the latest developments and trends shaping the market.
*Deutsche Bank has been ranked #1 globally and in Asia by Euromoney’s definitive global FX survey for eight years running.
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