Yuan surges up currency rankings

The yuan has become the second-most popular currency in cross-border transactions between China and the rest of the world, driven by its greater use in global trade and investment as offshore yuan hubs spring up, according to Swift.

Alain Raes, the chief executive for Asia-Pacific and Europe, Middle East and Africa at Swift, attributed the rapid growth to the proliferation of offshore yuan hubs outside Hong Kong, helping increase yuan deposits and bolstering formation of offshore yuan capital pools.

"Hong Kong has the most-established and largest [yuan] corridor with mainland China, but as other financial centres such as London, Singapore and Frankfurt establish the necessary infrastructure and agreements to support [yuan] transactions, we will see the [yuan] grow significantly in these markets," he said.

Swift operates the world's largest network facilitating the transfer of financial messages between banks.

The market share of yuan usage in payments between entities based in mainland China, Hong Kong and outside rose 36 per cent last month from a year ago. The US dollar remains in the top spot, while the Hong Kong dollar stands in third place.

Overall, the yuan held its position as the seventh most used global payments currency and accounted for 1.47 per cent of global payments, up from 1.43 per cent in April.