The Yuan or Renmimbi as it is officially called in China overtook Thailand’s Baht and the Norwegian Krone, SWIFT said in a statement today, adding that its usage slipped 1.3 percent compared with a 4.5 percent decline across all currencies. The Yuan has gained 1.5 percent this year, the only gainer among Asia’s 11 most-traded currencies, according to data compiled by Bloomberg.
“The continuous growth of Renminbi payments coming from key markets, such as the United Kingdom, further supports the international use of the Chinese currency,” Patrick de Courcy, head of markets for Asia Pacific at SWIFT, said in a statement, referring to the Yuan by its official name.
“Over the past two years, the Yuan’s market share has increased more than threefold whereas other Asian currencies stayed flat.”
The Yuan, which was little changed at 6.1360 per dollar in Shanghai today, will strengthen to 6.1 per dollar by the end of 2013, according to the median estimate in a Bloomberg News survey. HSBC Holdings Plc forecast in March that the currency will be fully convertible within five years.
China is promoting the Yuan’s use in international trade and finance to decrease its dependence on the U.S. dollar and diversify its $3.5 trillion foreign-exchange reserves, the world’s largest stockpile. The government earlier this month relaxed rules on cross-border use of the Yuan, allowing companies to give loans in the currency to overseas affiliates. China signed a three-year swap agreement last month for 200 billion Yuan ($33 billion) with the Bank of England to foster trading in London.
“People realize that, as China moves up the value chain, its imports will start rising and probably exceed exports,” Simon Constantinides, HSBC’s regional head of global trade and receivables finance for Asia Pacific, said in a July 16 interview.
“That means companies in China will be buying internationally and they are likely to pay in Renminbi.”