Chinese Yuan Regains Fifth Position in Global Currency Rankings

May 1, 2024 by

Image credit: Flickr

After dipping to the seventh position in February, the yuan climbed back to the fifth spot, with a 2.03 percent market share.

Payments value also rose by 33.5 percent compared to the previous period. This marks the currency’s best monthly advance since 2012.

Analysts say increased foreign trade settlements and upswings in Chinese investments largely contributed to its current standing.

The monthly SWIFT report highlighted that the currency is gaining popularity in Canada. Next to the Canadian Dollar, the yuan is the second most-preferred medium of exchange by locals for transactions with both China and Hong Kong.

Between March 2013 and March 2015, the value of Canada-yuan payments surged by as much as 213 percent.

“Canada’s new status as a clearing centre should help boost its rank among offshore RMB countries as more Canadian-based companies now have the opportunity to trade with China using the RMB,” said Chris Church, chief executive of Americas at SWIFT.

To facilitate smooth offshore trades between the two countries, China appointed the Industrial and Commercial Bank of China (ICBC) as the clearing bank in Toronto last November.

People’s Bank of China Governor Zhou Xiaochuan confirmed earlier in April that strengthening the yuan is needed to solidify a spot in the International Monetary Fund’s Special Drawing Rights basket of reserve currencies.

“The market is positive on the yuan as China’s leadership openly voiced support for the currency and on speculation the central bank will keep it stable for SDR inclusion,” said Tommy Xie, an economist at Overseas-Chinese Banking Corp. in Singapore. “The dollar weakness will continue on bets the Federal Reserve won’t raise interest rates soon.”

As a whole, other international currencies increased by 18.9 percent since February with the US dollar, euro, British pound, and Japanese yen leading the group.

Related Articles