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According to SWIFT’s RMB Tracker, the Chinese Yuan has entered the top four of world payment currencies by value in August 2015, overtaking the Japanese Yen and reaching a record high share of 2.79% in global payments.

In the last three years, the Renminbi RMB has overtaken seven currencies rising from position number 12 with a share of 0.84% in August 2012. The currency has also further established itself as the dominant currency for trade finance behind the USD.

Rise of the Chinese Renminbi as payment currency

The latest SWIFT RMB Tracker report shows that the Renminbi is now:

• #1 for Asia-Pacific intra-regional payments with China and Hong Kong
• #4 as an international payments currency by value
• Singapore remains the number one clearing center for RMB after Hong Kong
• 1,134 banks use RMB for payments with China and Hong Kong
• #2 for global issuance of Letters of Credit by value
• FX transactions in RMB by value reached over one million in August 2015
• FX transactions in RMB by value uin Aug 15 were up 50% YonY compared to Aug 14, and up 20% compared to Jul 15.

According to Michael Moon, Head of Payments, Asia-Pacific, SWIFT:

“2015 has seen a big shift in the RMB becoming a “business as usual” payment currency. The use of additional offshore clearing centers outside of Hong Kong has played a key role in driving RMB adoption, with most showing impressive growth in volume.”

UK is the largest country doing FX transactions in RMB, accounting for over 50% of all RMB trading outside China and HK. Other country ranking are as follows:

Top 5 countries trading RMB

More here in the SWIFT RMB (SIBOS) Tracker for Oct 15

To further enhance the liquidity in the Yuan (during European trading times when the SRD basket is calculated), Reuters report that China’s foreign exchange market will soon extend trading hours for the yuan to 11.30 p.m. (1530 GMT) to overlap with European trading hours, three sources with direct knowledge of the matter said on Wednesday.

Referring to the special drawing rights (SDR) basket, which the IMF uses as an internal unit of exchange and which currently comprises just the dollar, euro, yen and sterling, Joey Chew, Asian FX Strategist at HSBC in Hong Kong said that:

“The move will be a big boost to the yuan’s inclusion in the IMF’s SDR basket,”

According to Jessica Roberts, who supervises a growing yuan business at EBS:

“The yuan was now its third most traded currency after the euro and yen. If you look at what has been happening over the past few years, (Chinese bank) CCB has been appointed as the first clearing bank in London. Other Chinese banks have been setting up and expanding their trading desks in London.

Some of their in-house data also showed that daily trade in the offshore market, which a year ago tended to peak around 2300 GMT at the start of the Asian day, now instead sees its biggest spike when London wakes up.

More coverage here in an e-Forex Supplement: Coming of age – has trading of the renminbi reached a pivotal point?

Update on 20 Oct:  CME Group and China Construction Bank Sign Memorandum of Understanding, first time that Offshore Chinese Renminbi Futures contracts will be physically deliverable into London. CME Group is now able to offer Offshore Chinese Renminbi (CNH) Futures Contracts with physical delivery inLondon for the first time, which will be offered via CME Europe, CME Group’s European exchange. They will be supported by China Construction Bank (CCB), the sole-People’s Bank of China-designated clearing bank of RMB in London.

Filed under: FX, Paul Blank, Survey Results |