Mobius: Renminbi to replace yen as reserve currency by 2020

The renminbi is poised to replace the yen as a global reserve currency within the next decade, says Franklin Templeton's Mark Mobius.

Franklin Templeton's emerging markets expert says China's move to allow domestic companies to use the renminbi for overseas investment in January was a sign it wanted to internationalise the currency, while also laying the foundations for it to assume a wider role globally.

He says: "The renminbi might potentially replace the role of the Japanese yen, given that its usage was driven by Japan's former economic dominance."

"Despite global reservations stemming from China's status as a developing country and its cautious approach to monetary policy, it is very possible that the renminbi could become a global reserve currency by 2020."

Mobius, who runs a number of funds including the Luxembourg-domiciled Templeton BRIC fund, has outperformed the peer group over the last three years.

His fund returned 17.65% over three years, compared to the Emerging Markets sector average of -11.947%, according to Trustnet.

The fund is currently favouring Brazil, with 32% invested in the region. He also has 26% in China, 22% in India and 16% in Russia.