Yuan overtakes yen as global payments currency

China’s yuan became the fourth most-used world payment currency in August.

More than 1,700 financial institutions made worldwide payments in the yuan, up 14 percent from a year earlier.

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.

David Woo, Bank of America’s head of global rates and currencies research, told Bloomberg News on Monday that the yuan could lose as much as 10 percent of its value.

With Sibos taking place in Singapore, the top RMB clearing center after Hong Kong, SWIFT has produced a special edition of the RMB Tracker which provides an updated and consolidated overview of the Renminbi’s rise as an global currency.

The Swift statement also said that the yuan earlier this year had already become Asia’s most-active currency for payments to China and Hong Kong. “These facts likely played a significant role in its increased usage”, according to the report by global transaction services organisation Swift.

The drop in foreign exchange reserves was widely anticipated as the central bank stepped up intervention to stabilise the yuan currency after a surprise devaluation in August. “It shows that the so-called devaluation in August, which wasn’t massive in value, hasn’t driven people away from using the yuan”.

IMF staff members said in a report in August that the yuan trails other currencies in metrics the fund tracks in determining the SDR basket.

China is seeking to make the yuan used more internationally in line with its standing as the world’s second-largest economy. Last year, the yuan ranked seventh for share of official reserves, behind the four SDR members as well as the Australian and Canadian dollars, according to the International Monetary Fund.

“The currency has also further established itself as the dominant currency for trade finance behind” the dollar, SWIFT said.