HSBC Holdings yesterday said it had become the first international bank to have conducted yuan trade settlements across six continents.
The bank said it had closed a yuan deal for Groupo Tellerina, a Brazilian retailer of house and decoration products, adding South America to its list of places where it had completed yuan trade settlement services. Other continents were Asia, Europe, Australia, Africa and North America.
After the State Council began allowing the use of yuan in cross-border trade settlements in June, August recorded a whopping 50 billion yuan (HK$57.84 billion) in trade settlements, according to the mainland business publication Securities Daily.
Experts attribute the popularity of the yuan to its rapid appreciation and a weakening US dollar.
'Increasing the use of yuan in global trades is just China's first step at making it a reserve currency,' said Shen Minggao, Citibank's chief economist for Greater China. 'The yuan market is certain to grow, that's why international banks all want a share of it when it's just starting to take off.'
John Coverdale, co-head of HSBC's commercial banking division, expects the yuan to become one of the top three currencies used in global trade in the near future.
JP Morgan, Standard Chartered and Citibank have also entered the business. JP Morgan began officially offering cross-border settlements in May while Standard Chartered has participated in global roadshows with the mainland's central bank.
Hong Kong has become a hub for yuan settlements, but there is a catch. The Hong Kong Monetary Authority last week said the annual 8 billion yuan quota had been reached.
Discussions will now have to take place on expanding the quota.