There has been much talk recently of China’s moves towards full convertibility of the renminbi. And there has been much other talk about the wisdom of removing the Hong Kong dollar’s peg to the US dollar. But a column in Monday’s FTfm proposes uniting those two events.
Richard Harris, chief executive of Port Shelter Investment Management thinks his unusual idea has legs.
The problem China faces in achieving full convertibility, he points out, is that the renminbi is very much undervalued. China’s halfway house solution to assist overseas trading – the offshore renminbi known as CNH (Chinese yuan HK) might be the answer. The CNH trades very closely in value to China’s domestic currency the CNY (Chinese yuan) but neither is freely convertible.
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