{"id":33844,"date":"2018-04-29T20:36:20","date_gmt":"2018-04-30T01:36:20","guid":{"rendered":"http:\/\/olduvai.ca\/?p=33844"},"modified":"2018-04-29T20:36:20","modified_gmt":"2018-04-30T01:36:20","slug":"ubs-the-petroyuan-will-undermine-americas-dominant-role-and-create-a-sea-change-in-global-markets","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=33844","title":{"rendered":"UBS: &#8220;The Petroyuan Will Undermine America&#8217;s Dominant Role And Create A Sea Change In Global Markets&#8221;"},"content":{"rendered":"<div id=\"block-zerohedge-page-title\" class=\"block block-core block-page-title-block\">\n<h3 class=\"page-title\"><a href=\"https:\/\/www.zerohedge.com\/news\/2018-04-29\/ubs-petroyuan-will-undermine-americas-dominant-role-and-create-sea-change-global\"><span class=\"field field--name-title field--type-string field--label-hidden\">UBS: &#8220;The Petroyuan Will Undermine America&#8217;s Dominant Role And Create A Sea Change In Global Markets&#8221;<\/span><\/a><\/h3>\n<\/div>\n<div id=\"block-zerohedge-content\" class=\"block block-system block-system-main-block\">\n<article class=\"node node--type-article node--view-mode-full\" role=\"article\">\n<footer class=\"node__meta\">\n<div class=\"submission-wrapper\"><\/div>\n<\/footer>\n<div class=\"node__content\">\n<div class=\"clearfix text-formatted field field--name-body field--type-text-with-summary field--label-hidden field__item\">\n<p><em>From Hayden Briscoe, head of Fixed Income, Asia Pacific at <a href=\"https:\/\/www.ubs.com\/microsites\/china-insights\/en\/insights\/petroyuan.html\">UBS<\/a><\/em><\/p>\n<p><em>RMB-denominated oil contracts <a href=\"https:\/\/www.zerohedge.com\/news\/2018-03-26\/petroyuan-futures-volume-dominates-brent-big-traders-step\">began trading <\/a>for the first time in Shanghai on March 26. <strong>We believe that in the long term this will ultimately change how oil is traded globally, create a Petroyuan currency flow, increase the role of the RMB as a global trading currency, and compel investors to up their allocations to Chinese financial assets.<\/strong><\/em><\/p>\n<p><strong>Why now?<\/strong><\/p>\n<p>From March 26, seven oil grades will be tradeable on the Shanghai International Energy Exchange (INE), allowing Chinese buyers to buy forward in RMB. Since INE is based in Shanghai&#8217;s Free Trade Zone (FTZ), foreign traders will be allowed to trade in the market.<\/p>\n<p>China passed the US as the world&#8217;s largest oil consumer in 2016. Accordingly, China wants to pay for its huge import bill in its own currency (RMB) rather than USD.<\/p>\n<p>More importantly, however, China wants the new oil trading plan to promote RMB internationalization, i.e. forcing wider adoption of the RMB as a global trading currency, and switching to RMB payments for major imports is part of this process.<\/p>\n<p>The emergence of Petroyuan &#8211; RMB-denominated revenues collected by the world&#8217;s largest oil producers &#8211; is a natural development from this process<\/p>\n<p><a href=\"https:\/\/www.zerohedge.com\/sites\/default\/files\/inline-images\/ubs%20petro1.jpg?itok=e7KaI-Vl\" data-image-external-href=\"\" data-image-href=\"\/sites\/default\/files\/inline-images\/ubs%20petro1.jpg?itok=e7KaI-Vl\" data-link-option=\"0\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/www.zerohedge.com\/sites\/default\/files\/inline-images\/ubs%20petro1.jpg\" srcset=\"https:\/\/www.zerohedge.com\/sites\/default\/files\/styles\/inline_image_desktop\/public\/inline-images\/ubs%20petro1.jpg?itok=e7KaI-Vl 1x\" alt=\"\" width=\"500\" height=\"438\" data-entity-type=\"file\" data-entity-uuid=\"fb430f47-e8f3-46a1-89dd-c74c4c6d6286\" data-responsive-image-style=\"inline_images\" \/><\/a><\/p>\n<p><strong>Will this new system change the way oil is traded globally?<\/strong><\/p>\n<p>Probably not in the short term. Traders can&#8217;t move RMB freely in and out of the Shanghai commodity exchanges yet. That said, it&#8217;s unclear how much of a roadblock this is given that INE will be based in the Shanghai FTZ.<\/p>\n<p>Also, even with exchange convertibility, international investors and resource trading companies need to build up enough confidence in the INE as a trading hub. That requires time and, crucially, the tried, tested, and extensive\u00a0 data infrastructure to support the market, which China doesn&#8217;t have right now.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<p>&nbsp;<\/p>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>UBS: &#8220;The Petroyuan Will Undermine America&#8217;s Dominant Role And Create A Sea Change In Global Markets&#8221; From Hayden Briscoe, head of Fixed Income, Asia Pacific at UBS RMB-denominated oil contracts began trading for the first time in Shanghai on March 26. We believe that in the long term this will ultimately change how oil is [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[130,626,6466,3491,1029],"class_list":["post-33844","post","type-post","status-publish","format-standard","hentry","category-economics","tag-china","tag-petrodollar","tag-petroyuan","tag-rmb","tag-ubs"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/33844","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=33844"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/33844\/revisions"}],"predecessor-version":[{"id":33845,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/33844\/revisions\/33845"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=33844"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=33844"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=33844"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}