First, you need to consider the volume of trade denominated in it among freely transacting buyers and sellers in commodities trade:
The exponential growth of the renminbi as a trading currency – and of the offshore renminbi market – continues to stun observers. Three years in, despite global headwinds, and the scarcity of arbitrage opportunities as onshore and offshore rates have converged, renminbi redenomination shows no sign of faltering. Trade in renminbi in 2012 is on track for $425bn, up almost 30 per cent on 2011.Second, also consider the relaxation of foreign investment quotas and what they mean for the currency:
Deregulation, too, is picking up pace. This year, China quadrupled to Rmb270bn the quota under which eligible institutions invest in China’s stock market. And last month, the first foreign bank was granted approval for a renminbi denominated cross-border loan quota on behalf of a multinational client. The quota arrangement is a major step forward, as corporates can use it to move previously trapped onshore renminbi cash to offshore treasury centres where it can be managed alongside other currencies.In case you're wondering, the "foreign bank" in question is StanChart (again from China Daily). Aside from improving loan flexibility, this facility also increases the offshore utilization of RMB accumulated onshore:
The scheme has transformed the lending of renminbi between companies from one based on a traditional entrustment loan (with banks as intermediary agents) to one where two parties sign lending agreements directly, agree interest rates and manage the loan drawdown themselves.Think of MNCs creating currency stashes to be deployed whenever there is a need to do so. In the past this could not be so easily done, but emerging facilities alike this one are cropping up for pooling in treasury centres that are obviously abroad. Ultimately, the RMB will be more widely adopted if market participants demand yuan for more variegated purposes and not actions solely on the part of the Chinese government.
Anthony Lin, managing director and head of Transaction Banking at Standard Chartered Bank (China) said renminbi cross-border lending brings huge flexibility of corporate treasury management, allowing them to negotiate lending frequency and rate according to their actual needs. He said it also enables corporations to transfer onshore renminbi surplus to their global cash pools for central deployment and use, hence to improve their global treasury efficiency.