Renminbi (RMB)/Yuan Appreciation & Internationalization

China’s Yuan Climbs Past 7 Per Dollar as PBOC Caves in to Bulls

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BEIJING/SHANGHAI, Dec 29 - Holdings of China's digital yuan, or e-CNY, will start generating interest income next year under a new framework, state broadcaster CCTV said on Monday, as China steps up efforts to promote the use of its central bank digital currency. Starting January 1, e-CNY stored in wallets will earn interest based on demand deposit rates, becoming the world's first interest-bearing central bank digital currency, according to CCTV. It means e-CNY is advancing into an era of "digital deposits", from "digital cash", CCTV said.

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Wrought said:

Digital yuan will earn interest starting from 2026. Folks will presumably be encouraged to hold, transact, and otherwise make greater use of it.

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• Rio Tinto Group and Fortescue Ltd will stop using S&P Global Energy Platts Iron Ore Index for term contracts with China Mineral Resources Group.
• Rio will switch to an alternative iron ore index published by Fastmarkets Ltd, while Fortescue will use an average of China's Mysteel and the Argus Iron Ore Index.
• The change follows public criticism of the current mechanism from China Mineral Resources Group, which had described the way the industry sets prices as "irrational" and influenced by overseas futures markets.

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CMRG said in late October that the way the industry sets prices is “

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” and influenced by overseas futures markets, as US-dollar benchmarks are used. The agency has become more assertive this year, going as far as to ban some BHP Group iron ore products after long-term contract negotiations faltered. It has also sought to increase its influence by curbing the hoarding of iron ore at ports and creating an overseas trading body.


The state buyer is now negotiating with other top suppliers for next year’s shipments, including BHP Group and Vale SA.

As part of the ongoing talks, both Rio and Fortescue have agreed to extend their long-term supply contracts with CMRG by six months into 2026, according to the people. The period for the two miners is different, with Rio’s existing long-term contract originally due to expire in February next year, while Fortescue’s contract was supposed to end this month.

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Chinese mine operators in Zambia started paying royalties and taxes in yuan in Africa’s second-biggest copper producer, the latest sign of the growing acceptance of the currency on the continent. Payments using the Chinese unit began in October, the Bank of Zambia said in reply to emailed questions on Wednesday. The Zambian authorities are the first in Africa to confirm they are accepting mining-tax payments in renminbi.

Africa is emerging as a key arena in Beijing’s efforts to internationalize the yuan, especially in nations that are heavily indebted to it. Kenya this year converted dollar loans it owed to China into yuan-denominated debt, Ethiopia began talks to do the same, and Zambia said it would consider following suit. “A large portion of copper exports go to China and the Chinese mining firms already receive some, if not all, of their payments for their exports to China in renminbi,” the central bank said. “The Bank of Zambia has the diversification and building-up of its reserves as a key objective, and purchasing renminbi enables the bank to actualize this objective.”

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GulfLander said:

Look how Bloomberg frames it

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