HONG KONG • China's yuan became the fourth most-used world payment currency in August, overtaking the Japanese yen, global transaction services organisation Swift said yesterday.
The yuan has surpassed seven currencies in the past three years as a payment currency and its usage is now only after the US dollar, euro and sterling. The Singapore dollar was placed 11th on Swift's list.
A "substantial" increase in usage of the yuan in the final week of August was triggered by market volatility caused by concerns about the Chinese economy and Beijing's devaluation of the currency, Swift said in a report.
Overall, global yuan payments increased in value by 9.13 per cent in August, while payments across all currencies decreased by 8.3 per cent, according to the organisation.
The yuan reached a record high market share of 2.79 per cent in global payments for the month, compared to 1.39 per cent in January last year.
But it still remains a small player on the global state compared to 44.8 per cent for the US dollar, 27.2 per cent for the euro and 8.5 per cent for the British pound, The Wall Street Journal reported. The Singdollar had a market share of 0.89 per cent, according to Swift.
Chinese officials have actively sought a greater role for the yuan on the global stage, and Beijing has urged the International Monetary Fund to declare the yuan an official reserve currency alongside the greenback, euro, pound and yen.
More than 1,000 banks in 100 countries can now use the yuan for payments with China and Hong Kong, about 20 per cent more than two years ago. And though about 70 per cent of yuan payments are processed through Hong Kong, more than a dozen other clearing centres have sprung up in cities around the world, including in Kuala Lumpur, Sydney and Bangkok.
More than 100 countries used the yuan for payments in August, of which over 90 per cent of flows were concentrated in 10 countries.
Singapore processed 24.4 per cent followed by Britain with 21.6 per cent.
More than 1,700 financial institutions made worldwide payments in the yuan, up 14 per cent from a year earlier. About 600 of these institutions used the yuan for payments without a leg with China or Hong Kong.
In the trade finance sector, the yuan has a 0.1 per cent share in the global issuance of letters of credit by value, strengthening its position as the second most-used currency for this purpose, Reuters said.
Foreign exchange transactions in the yuan by value also increased by 20 per cent in August from a month earlier, probably due to the devaluation of the currency by the People's Bank of China, Swift said.
More than 50 per cent of the yuan foreign exchange trading outside China and Hong Kong is done with Britain, followed by the United States, Singapore and France.