Renminbi Shakes Up Global Currencies

Abstract

For more than a decade, when the foreign exchange market has talked about the three major global currencies, or the “G3,” it has been referring to the US dollar (USD), the Euro (euro) and the Japanese yen 0PY). These three currencies account for over 70% of all foreign exchange (FX) transactions in recent years. However, there are seismic structural shifts unfolding behind the G3 and the emerging markets, giving rise to some distinctive trends that are conducive to the rise of the Chinese renminbi (RMB),¹ or the “redback,” as market players sometimes call it, to challenge the global dominance of the G3 currencies.