China yuan overtakes yen in global payment rankings: SWIFT

On Wednesday of last week, the global Monetary Fund announced that China was reporting its currency reserves to the fund for the first time. In August 2012 it ranked 12th with a share of just 0.84 percent.

Despite the financial turmoil in China an unexpected devaluation, the yuan has now become the world’s fourth-most-used payments currency, edging out Japan’s yen for the spot.

Overall, global yuan payments increased in value by 9.13% in August, while payments across all currencies decreased by 8.3%, according to Swift. “It shows that the so-called devaluation in August, which wasn’t massive in value, hasn’t driven people away from using the yuan”. In August 2015, the RMB reached a record high share of 2.79% in global payments by value after overtaking seven currencies during the last three years.

More than 100 countries used the yuan for payments in August, of which over 90 percent of flows were concentrated in 10 countries.

With regard to handling global payments in Chinese Renminbi, Hong Kong is the world’s largest offshore RMB centre, processing 70.4% of RMB payments. Worldwide payments in the yuan were up 14 percent from a year earlier, and have been provided by more than 1,700 financial institutions.

This year the yuan has also become the No. 1 currency for inter-regional payments with China and Hong Kong, something that insiders say has helped bolster growth in Asia. It was second for global issuance of letters of credit by value with a 9.1 percent share, compared with 80.1 percent for the USA dollar.

More than 50% of the yuan foreign exchange trading outside China and Hong Kong is done with the United Kingdom, followed by the U.S., Singapore and France.

There was a “substantial” increase in the use of the Chinese currency in the final week of August, and came on the back of market volatility, according to a report by SWIFT. The Fund said yesterday China needed to expand market forces to return to sustainable growth and to implement effective governance.

The report also said after the yuan’s 3% depreciation in August, its exchange rate was in line with “medium term” fundamentals.