Yuan gains ground as global currency
2014-10-31 13:19:22Source:China DailyAuthor:
The yuan's share of global payments rose to a record in September as China bolstered efforts to promote international use of its currency.
The yuan accounted for 1.72 percent of payments, up from 1.64 percent the previous month, the Society for Worldwide International Financial Telecommunications reported on Thursday.
The value of transactions increased 13.2 percent and the currency ranked seventh in terms of usage, Swift said.
China started direct trading between the yuan and the Singapore dollar this week, after making the euro exchangeable for its currency in Shanghai last month.
Similar links exist for the US, Australian and New Zealand dollars, the British pound and Japan's yen, while South Korea plans to announce measures on Friday to support yuan-related financial services.
"We're seeing companies seize the opportunities presented by China's currency liberalization to deepen business relationships in the world's second-largest economy," said Vina Cheung, global head of renminbi internationalization, payments and cash management at HSBC Holdings Plc in Hong Kong.
"The growth in renminbi payments between offshore trading centers such as Singapore, UK and Germany is encouraging."
A third of China's trade will be settled in yuan by 2015, and the currency will become fully convertible by 2017, HSBC said in the statement, reiterating forecasts.
The currency has strengthened 0.4 percent against the dollar this month, trimming its loss for the year to 1 percent, according to data compiled by Bloomberg. It has advanced 35 percent since a dollar peg ended in 2005.
China should take the opportunity to improve the market-oriented mechanism of the yuan when investors no longer expect moves to be one-sided, wrote Guan Tao, head of the balance of payments department at the State Administration of Foreign Exchange, in an article in the Shanghai Securities News on Thursday.
Yuan payments in Singapore surged 574 percent over the last nine months, the biggest jump among offshore yuan hubs excluding the Chinese mainland and Hong Kong, according to Swift.
Luxembourg and the UK boasted the second- and third-highest growth rates.
"Payments, foreign exchange and trade finance are the markers to watch for growth in renminbi internationalization," said Alex Medana, Hong Kong-based director of securities markets for Asia Pacific at Swift.
"The yuan is primarily used as a trade settlement currency, but it is worth noting that it is also making progress as an investment currency."