The market share of China's currency in the global payment system grew to a four-month high in April, cementing its position as the world’s fifth largest payment currency by value and providing further proof the currency is on track for wider acceptance on the global stage.
The Chinese yuan accounted for 2.07 per cent of the value of global payments tracked by SWIFT in April, up from 2.03 per cent in March and slightly below the peak of 2.17 per cent in December, it said in a monthly report released on Wednesday. SWIFT is an interbank messaging network provider through which majority of international banks and corporations settle trades and investments.
The yuan’s market share is still tiny when compared with the US dollar and Euro, the top two payment currencies which accounts for 45.14 per cent and 27.36 per cent of global payments by value last month.
However, growth has been robust, in particular when looking at the increasing willingness to settle yuan in the payments between companies based in China, including Hong Kong, and the rest of countries in the Asia Pacific region, the report said.
“Big trading partners like Singapore, Taiwan and South Korea have adopted the renminbi for the majority of their payments with Greater China. The new appointments of four clearing centres (South Korea, Malaysia, Thailand and Australia) within the region should also have a positive impact on RMB adoption, solidifying the important role of the currency within Asia Pacific and abroad,” said Michael Moon, Head of Payments Asia Pacific at SWIFT.
Two years ago, only 7 per cent of payments between China and the rest of Asia were denominated in yuan. Now the ratio has gone up to 31 per cent. It has replaced the Japanese Yen to become the most popular currency when Asian companies do transactions with Chinese companies.