Offshore Renminbi: Setback amid tariff uncertainty – Standard Chartered

Our Renminbi internationalisation tracker fell in May-July, with most components edging down. Lingering uncertainty on US-China tariffs may have weighed on global Renminbi usage. Cross-border payments to receive policy support; further outbound relaxation to lift CNH bond demand, Standard Chartered's economists report.

The worst may have passed

"The Standard Chartered Renminbi Globalisation Index (RGI), our proprietary measure of international Renminbi usage, fell for a third straight month to 4,666 in July from the recent peak of 5,169 in April. This takes YTD performance to -2.1%, likely reflecting the impact of US-China tariff uncertainty on market sentiment. Four out of five RGI components – ‘CNH FX turnover’, ‘CNH deposits’, ‘cross-border payments’ and ‘Dim Sum bonds’ – fell in May-July; only ‘foreign holdings of onshore RMB assets’ rose. That said, the decline moderated in July versus June as a US-China trade truce was reached and trade talks continued."

"Supply-demand dynamics for the CNH bond market have remained favourable since our May update, though net issuance of CNH bonds and certificates of deposit (CDs) combined was negative during the May-July. The decline in CNH deposits may have been driven by issuance of Renminbi-denominated Hong Kong green bonds and infrastructure bonds, CNH China Government Bonds (CGBs), and PBoC offshore bills, as well as the upbeat performance of the mainland equity market."  

"On the positive side, the worst of the US-China trade war is likely behind us, although we see twists and turns ahead. While the Renminbi’s share of global cross-border payments through SWIFT fell to two-year lows in June and July, average daily transactions via the Cross-Border Interbank Payment System (CIPS) reached a new high in Q2. In addition, China’s authorities have signalled that they will promote global usage of Renminbi. Further relaxation of outbound investment and payments since June should boost mainland demand for CNH bonds for the rest of 2025."