The World’s New Reserve Currency? Everything You Need To Know About PetroYuan
Earlier this week, we pointed out that the ‘PetroYuan’ is on the verge of becoming reality with Graticule’s Adam Levinson noting that the birth of a yuan-denominated oil contract will be a “huge story” in the fourth quarter, and will be a “wake up call” for investors who haven’t paid attention to the plans.
As a reminder, nothing lasts forever…
Judging by the interest in the topic, investors are less informed than many believed and so the different teams within Société Générale Cross Asset Research examine what this contract would mean for the global oil markets and for the internationalisation of the yuan – if it gets off the ground.
Part 1 The proposed yuan-denominated crude oil futures contract
- Why is a yuan-denominated Chinese crude futures contract interesting to think about? Why is it potentially significant?
- Would yuan-denominated Chinese crude futures affect the physical markets?
- Has China actually proposed changing its crude buying from USD to yuan?
- What about the crude producers and exporters?
- How much non-USD crude trade currently exists?
- If small volumes don’t change how the oil market operates, how big would the volumes have to be to make a difference?
- Is there another commodity that trades in multiple currencies at different exchanges that we can learn lessons from?
Part 2 Another step towards currency internationalisation?
- Why does China want to introduce a yuan-denominated crude oil futures contract?
- How can the yuan succeed in becoming a reserve currency?
- What does the status of an international currency mean for the yuan?
- What will an internationalised yuan mean to China’s FX reserves?
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Part 1: The proposed yuan-denominated crude oil futures contract
…click on the above link to read the rest of the article…
We begin with the oil markets.
