Yuan gains ground as an international currency
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.