Chinese Yuan Slips in Global Currency Rankings

According to SWIFT, the use of China’s yuan has declined, causing the currency to fall to seventh place in international payments rankings.

La Hulpe, a Belgium-based organization, confirmed that poor performance during the Chinese New Year holiday caused the sudden drop.

Additionally, a study by HSBC Holdings highlighted that business transactions worldwide using the currency have decreased. In the annual survey, the yuan fell five percentage points over the past year.

“The global volume of payments in RMB will fluctuate, and is actually down by value compared with last month. But the broader support by more countries beyond Hong Kong, underlining its international use, suggests the potential for future clearing centers and further development of the currency,” said Michael Moon, Head of Payments Asia-Pacific at SWIFT.

Many financial hubs in China are feeling the pinch, including Hong Kong, where shares of the currency are down by 5 percent in December 2012 to 72 percent last month.

The city has seen a continuous decrease in the past two years, largely because of new regulations that have allowed other locations to handle the currency for trading and cross-border transactions. The movement started when Beijing opened up the use of the Chinese yuan to foreign financial institutions around the world.

Out of all the regions handling the yuan, Singapore currently holds a 6.17 percent market share, making it a serious threat to Hong Kong’s role in the currency’s activities.

“It is critical that China continue to move to a more market-determined exchange rate and a more transparent exchange rate policy. We look forward to working with China as it continues to deepen its financial reforms and becomes more integrated into, and assumes greater responsibility in, the global financial system,” mentioned U.S. Treasury Secretary Jacob Lew during a meeting with senior Chinese officials in Beijing.