Abstract: The forming process of Renminbi bloc in Asia plays an important role in Renminbi internationalization. The US-China trade tensions have accelerated the structure changes of global industrial specialization and international trade. With part of China’s industries transferring to other Asian countries, China’s trade and economic relations with Asian countries have strengthened, which may affect the forming process of Renminbi bloc in Asia. Based on the currency weights estimated from a modified Frankel-Wei regression model with a 48-month rolling window, a currency influential index and a renminbi’s relative influence indicator are proposed and the currency bloc forming process in whole Asia and Asian countries are studied. Besides, an event study method is applied to explore the impacts of US-China trade tensions on how Renminbi bloc in Asia and Asian countries changes. The results indicate that the US dollar and Renminbi are the most influential reserve currencies in Asia, while the US dollar is still the dominant international reserve currency. Countries covered under Renminbi bloc are located in Southeast Asia, South Asia and Central Asia. The US-China trade tensions have a positive impact on Renminbi bloc forming process in Asia, and further escalation of tensions has no significant negative effect on it. The US-China trade tensions help strengthen the Renminbi bloc in Indonesia, Bhutan and India, and also have a positive impact on improving the influence of Renminbi on Yemen, Nepal and Afghanistan’s national currencies. However, the further escalation of US-China trade tensions accelerate the deviation of Kyrgyzstan and Turkey’s national currencies away from Renminbi bloc, which weakens the influence of Renminbi in these countries.

Key words: Renminbi bloc, US-China trade tensions, currency influential index, exchange rate, event study