China's Yuan overtakes euro to become second-most used currency in global trade
China’s yuan overtook the euro to become the second-most used currency in global trade finance this year.
China, Hong Kong, Singapore, Germany and Australia were the top users of yuan in trade finance, according to the Belgium-based Society for Worldwide Interbank Financial Telecommunication (SWIFT).
The yuan’s share of global trade finance was 1.89pc in January 2012, while the euro’s was 7.87pc, SWIFT said.
“The renminbi is clearly a top currency for trade finance globally and even more so in Asia,” Franck de Praetere, Swift’s Singapore-based head of payments and trade markets for Asia Pacific, said in a statement.
China is seeking a greater role for its currency in global trade and investment as the state loosens controls on the exchange rate and borrowing costs in the world’s second-largest economy.
People’s Bank of China Deputy Governor Yi Gang said last week that it is no longer in the nation’s interest to keep building up its foreign-exchange reserves, which totaled a record 2.7 trillion euro at the end of September.
Yuan deposits in Hong Kong, the largest pool outside China, rose the most since April 2011 to a record 782 billion yuan (94.7bn euro) in October.
Agreements were announced this quarter to start direct currency trading between the yuan and both the British pound and Singapore dollar.
The Chinese currency ranked number 12 for transactions in the global payments system in October, unchanged from the previous month, according to SWIFT figures.
Payment value for the currency rose 1.5pc that month, less than the 4.6pc growth for all currencies, the Swift data showed.
That saw the yuan’s market share drop to 0.84pc from 0.86pc in September.
Daily yuan transactions surged to $120bn in April from $34bn in 2010, making it the ninth most-traded currency in the world, according to a September report by the Bank for International Settlements in Basel, Switzerland.
The yuan has appreciated 2.3pc against the greenback this year, the best performance in Asia, according to data compiled by Bloomberg. The currency was little changed at 6.0926 per dollar today in Shanghai.