Yuan gains ground as an in­ter­na­tional cur­rency

China Daily (Canada) - - BUSINESS - By BLOOMBERG

Theyuan’sshare­of­glob­al­pay­mentsrose­toa record in Septem­ber asChina 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 forWorld­wide In­ter­na­tional Fi­nan­cial Telecom­mu­ni­ca­tions re­ported on Thurs­day.

The value of trans­ac­tions in­creased 13.2 per­centandthe cur­rency ranked­sev­enth in terms of us­age, Swift said.

China started di­rect trad­ing be­tween the yua­nandthe 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 HSBCHold­ings Plc in­HongKong.

“The growth in ren­minbi pay­ments be­tween off­shore trad­ing cen­ters such as Sin­ga­pore, UKandGer­many 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.

Chi­nashould­taketheop­por­tu­ni­ty­toim­prove 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 Shang­haiSe­cu­ri­tiesNew­sonThurs­day.

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 sec­on­dand third-high­est growth rates.

“Pay­ments, for­eign ex­change and trade fi­nance are the mark­ers to watch for growth in ren­minbi in­ter­na­tion­al­iza­tion,” said Alex Medana, HongKong-based di­rec­tor of se­cu­ri­ties mar­kets forAsia Pa­cific at Swift.

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