The yuan has become Asia’s most-active currency for payments to China and Hong Kong, according to the Society for Worldwide Interbank Financial Telecommunications (SWIFT).
The Chinese currency accounts for an average of 31 percent of the region’s payments to China and Hong Kong, up from 7 percent in April 2012, SWIFT said in a statement yesterday.
Singapore, Taiwan and South Korea have adopted the yuan — also known as the renminbi — for the majority of payments to the Greater China region, SWIFT Asia-Pacific payments head Michael Moon said in Singapore.
“The Asia-Pacific [region] is clearly paving the way forward when it comes to renminbi adoption,” Moon said in the statement.
The naming of new yuan-clearing banks in the region should also have a positive impact on yuan adoption, he said.
The People’s Bank of China has appointed yuan-clearing lenders in 11 cities, including Seoul, Sydney, Kuala Lumpur and Bangkok in the past year.
China is encouraging the yuan’s global usage to bolster the case for being granted reserve status by the IMF later this year.
The yuan failed to qualify in a 2010 review as it was deemed not “freely usable.”
The yuan retained its ranking of fifth in global payments last month, with a market share of 2.07 percent, SWIFT said. It was behind the US dollar, euro, British pound and the yen.
The IMF’s mission in China on Tuesday said that the yuan is no longer undervalued, and it would work closely with authorities toward inclusion, which is “not a matter of if, but when.”
The yuan is little changed against the greenback this year, while the Bloomberg Dollar Spot Index, which tracks the US currency versus 10 peers, is up 5.3 percent. That was even as economic growth is forecast to slow to 7 percent this year, the least since 1990, according to the median estimate in a Bloomberg survey.
“Talks with the IMF on adding yuan to the reserve currency basket are probably under way,” Bank of East Asia Ltd (東亞銀行) Hong Kong-based currency analyst Kenix Lai (賴春梅) said.
“There are political reasons for the yuan to stay relatively strong, even as the economy is slowing down. A stable exchange rate is instrumental to boost the yuan’s global usage and its reserve currency bid,” Lai said.
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