The World Bank has issued its first Yuan-denominated bond in a move that will help China as it tries to increase the use of its currency in global markets. The Washington-based lender said Tuesday that it would raise $76 million from the two-year bond issued on Hong Kong's Yuan-denominated bond market.
The move will "further deepen the market and permit investors to diversify their currency holdings and expand renminbi exposure," the World Bank said in a statement, using the official name for the Chinese unit.
Last month, China said its second Yuan-denominated bond issue in Hong Kong had initially raised $755 million, with plans for another $453 million to be sold.
The move followed Beijing's first Yuan-denominated bond issue in Hong Kong in September last year, worth about $906 million.
It also comes after heavy equipment maker Caterpillar and fast-food giant McDonald's each issued Yuan-denominated bonds in Hong Kong, the first such sales by non-financial foreign firms in the city. The semi-autonomous Chinese territory is acting as a test bed for the internationalization of China's currency. Beijing is seeking to broaden the use of the Yuan in the financial hub after approving its use to settle cross-border trade in 2009.
Despite the global success of Chinese exporters, the Yuan plays only a minor international role because it cannot be freely exchanged for other currencies. And official controls make it difficult to move the Yuan in and out of China.
Top leaders in Beijing want to see the Yuan adopted as a global reserve currency to reflect China's growing economic and political clout.
Allowing the Yuan to be used more widely overseas also helps China reduce the amount of dollars flowing into the country, which is adding to its already world-beating foreign exchange stockpile and fanning inflation.