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Rise in Number of UK Retailers Trading in Renminbi

BritCham / CBBC
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An increasing number of UK retailers are said to be making global payments to their Chinese suppliers in renminbi currency.

Barclays Capital has revealed the growth in the practice in recent months as companies recognise the financial benefits of doing so, according to a report in the Independent.

The use of the renminbi is said to have become more widely available since it was moved to a managed floating exchange rate in June 2010, which replaced it tie to the US dollar.

Sam Ford, managing director in risk solutions at Barclays Capital, said: "This change in retailers trading directly in renminbi has only started to occur over recent months."

He added that organisations are no longer just talking about altering their payment solutions, but actually introducing the new methods.

The move means Chinese suppliers no longer have to consider significant appreciation of the local currency when forging deals with retailers in order to protect their margins.

Meanwhile, making payments in renminbi allows UK chains to experience potential cost-saving benefits when they take control of the currency risk.

Mr Ford commented: "By paying their Chinese suppliers in the local currency, instead of US dollars or sterling, it allows retailers to negotiate better terms with those suppliers."

It remains to be revealed by Barclays Capital which firms have introduced the use of the renminbi and whether it will increase in the forthcoming months.

The Financial Times recently reported that Beijing has published new rules designed to govern how foreign companies can bring offshore renminbi funds into China for investment.

It was noted that organisations such as McDonald's and Caterpillar have been resorting to the currency in a bid to boost their profits.

Source: HiFX.co.uk

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