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Yuan outperforms euro, becomes 2nd most popular trade finance currency

Published time: December 03, 2013 15:24
Edited time: December 05, 2013 06:26
AFP Photo/Frederic J. Brown

AFP Photo/Frederic J. Brown

The yuan has replaced the euro to become the second most widely used currency in global trade in 2013, according to the SWIFT network responsible for international financial transactions.

The share of the yuan in global trade finance has jumped from 1.89 percent in January 2012 to 8.66 percent in the form of letters of credit and collections in October 2013, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) data shows.

The share of trade settlements in the euro fell from 7.87 percent to 6.64 percent in the same period. The US dollar still leads with 81.08 percent of foreign trade payments using the American currency in October. 

The most active yuan users are Chinese and Hong Kong companies which account for about 80 percent of the total foreign trade operations in the yuan. The remaining 20 percent is spread among Singapore (12%), Germany (2%), Australia (2%) and other countries (4%). 

"The renminbi is clearly a top currency for trade finance globally and even more so in Asia," Franck de Praetere, SWIFT’s Singapore-based head of payments and trade markets for Asia Pacific, commented in a statement.

 “I think it is more to do with using China as a carry trade – people want to get their money into China,” says Nick Verdi, Asia FX strategist at Barclays. “With global interest rates so low, China really is the only place where you can get such a large carry. Trade finance is one of the key avenues to take advantage of that.

According to SWIFT, in October the yuan remained the world’s 12th most popular means of payment, its share decreased to 0.84 per cent from 0.86 per cent in September. Even though value of payments grew by 1.5% for the month, payments in all currencies rose by 4.6% 

Hong Kong, the largest yuan hub outside China, has accumulated a record 782 billion yuan ($128 billion) in October. The same month the UK’s Chancellor George Osborne announced plans to make London an offshore banking center for the yuan.

Comments (12)


Stupidname Filter 16.02.2014 08:35

Bond 09.12.2013 11:58

However it is not the intention to undermine the US currency as China holds over 2 trillion US dollars in US government debt and related securities.


Ar e you sure the Chinese arent holding onto that amount of debt for another reason? Have you noticed that China can collapse US economy over night by selling it all causing panic among the markets, but the US do not have an ability to retaliate? Why would China want to overtake the US in terms of money, since the wealthier you are, the more to blame you are for todays problems, just need to ensure your in charge.


Stupidname Filter 16.02.2014 08:20

Enrique 04.12.2013 20:17

Gerry, try to buy something with Yuans in America, Europe or anywhere else in the World...Nobody wants then. But I agree that in a decade things can change and Yuan can take 15% of the reserve currency market.


You do realise us$ is again only accepted as legal tender in us and in African countries where the us or europe have collapsed the economy. Thats why we have money changers... they convert currency from one to another, and notice most money changers have low margins on exchanging yuan, because they like holding it as reserve, used to be case with us$...


JOE G 06.12.2013 13:52

Is it just me or is anybody else excited about the day when China takes the number 1 seat from the US?

View all comments (12)
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