Yuan use rises to 8th po­si­tion

In­ter­na­tional pay­ments in ren­minbi surge

China Daily (Canada) - - BUSINESS - By GAO CHANGXIN in Shang­hai gaochangxin@chi­nadaily.com.cn

The yuan be­came the world’s eighth most-used cur­rency in in­ter­na­tional pay­ments in De­cem­ber, the So­ci­ety for World­wide In­ter­bank Fi­nan­cial Telecom­mu­ni­ca­tion said on Thurs­day. Lifted by the Chi­nese govern­ment’s ef­forts to pro­mote its global clout, the yuan over­took 22 currencies over the past three years to achieve a mar­ket share of 1.12 per­cent, just be­hind the Swiss franc, which held a share of 1.29 per­cent.

This year, econ­o­mists be­lieve that the yuan’s in­flu­ence is set to grow fur­ther as Bei­jing adopts new lib­er­al­iza­tion mea­sures to fa­cil­i­tate the yuan’s cross-bor­der move­ments.

“A ques­tion is whether the ren­minbi will con­tinue its climb, or at least main­tain its sta­tus as a ‘top 10’ cur­rency for pay­ments. We might ex­pect it to fall back dur­ing the first quar­ter of 2014 as a re­sult of the Chi­nese New Year, as we have seen pre­vi­ously, ” Franck de Praetere, head of pay­ments and trade mar­kets, Asia-Pa­cific, at SWIFT, told As­set Magazine on Thurs­day.

“The fact that be­tween Novem­ber and De­cem­ber 2013 other currencies grew 7 per­cent while the ren­minbi grew 15 per­cent, how­ever, might sug­gest that use of the Chi­nese cur­rency is be­com­ing ‘busi­ness as usual’ for the world’s fi­nan­cial in­sti­tu­tions and busi­nesses.”

A surge in yuan-de­nom­i­nated trade helped boost the cur­rency’s global clout. The Peo­ple’s Bank of China said last week that global trade set­tled in yuan hit 4.63 tril­lion yuan ($764 bil­lion) in 2013, up 57 per­cent from 2012.

China’s in­ter­na­tional trade reached $4.16 tril­lion in 2013, up 7.6 per­cent from a year ear­lier.

Cross-bor­der di­rect in­vest­ment de­nom­i­nated in yuan jumped 90 per­cent to 534 bil­lion yuan in 2013.

SWIFT said in De­cem­ber that the yuan ac­counted for 8.66 per­cent of letters of credit and col­lec­tions used in global trade fi­nance in Oc­to­ber, se­cond only to the dol­lar.

The prospect of the yuan’s fur­ther ap­pre­ci­a­tion this year against the US dol­lar of­fers a strong in­cen­tive for global traders and in­vestors to con­tinue to hold and use the cur­rency, an­a­lysts said.

Qu Hong­bin, chief China econ­o­mist with HSBC Hold­ings Plc, has fore­cast the yuan will strengthen 1 to 2 per­cent this year. “The track is still up­ward for the yuan in 2014, but fluc­tu­a­tion along the way will be wider than ever,” Qu told a news con­fer­ence ear­lier this month.

The yuan, which closed at 6.0510 against the dol­lar on Thurs­day on­shore, will gain 1.4 per­cent this year to 5.97, ac­cord­ing to the me­dian es­ti­mate in a Bloomberg News sur­vey.

HUAN WEI / FOR CHINA DAILY

Global trade set­tled in yuan reached $4.16 tril­lion in 2013, up 7.6 per­cent from a year ear­lier.

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