China’s renminbi became the fourth most-used world payment currency in August, overtaking Japan’s yen, meaning it’s behind only the U.S. dollar, the euro and the sterling. About 600 of these do not have an office in China or Hong Kong.
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The U.S. greenback in August ranked as the top payments currency with a 44.82 percent share, SWIFT said, followed by the euro at 27.20 percent and the British pound at 8.45 percent.
“The appointment of clearing centers in Taipei, Singapore, Seoul and more recently Sydney and Kuala Lumpur clearly promotes the use of the currency for global trade and finance across the region”, said Michael Moon, SWIFT’s head of payments for Asia Pacific.
China is poised to report another fall in its foreign exchange reserve for September, albeit at a lesser extent compared with the record fall posted in August, analysts say.
The proportion of yuan-denominated transactions surged to a record 2.79 percent in August, beating the yen’s 2.76 percent, the Society for Worldwide Interbank Financial Telecommunications, or SWIFT, said yesterday.
China has been pushing the yuan’s case for inclusion, which Standard Chartered Plc estimated could trigger as much as $1 trillion of inflows into the currency.
“Letting the currency go is going to be part of a package of monetary easing, let’s call it Chinese quantitative easing”, said Woo, referring to the unconventional policy where a central bank buys financial assets to release more of its currency into the economy, thus devaluing it. “These facts likely played a significant role in its increased usage”, according to the report by global transaction services organisation Swift. Key indicators to qualify include the share a currency makes up of official reserves, worldwide banking liabilities and global debt securities, as well as its use in foreign-exchange markets.
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The PBoC has appointed yuan-clearing lenders in 10 countries including South Africa and Argentina in the past year and opened the local bond and currency markets to overseas central banks.
