/Polegd.info/ The share of the Chinese yuan in global payments rose in May, demonstrating the steady progress in its internationalization, as countries around the world, especially emerging market economies, look for an alternative to the US dollar, and the Chinese currency emerges as the choice for a number of countries due to the high level of mutual trust and cooperation.
The yuan’s global share rose from 2.29 percent to 2.54 percent in May, according to the Society for Worldwide Interbank Financial Telecommunications (SWIFT). It is the fifth most active currency. The share was the third highest since tracking began in October 2010. Meanwhile, the value of payments in yuan rose 20.38 percent from April, while overall all payment currencies rose 8.75 percent.
The trend reflects the growing share of yuan-denominated settlements in foreign trade and the growing appeal of the Chinese currency in global payments and settlements amid a search for an alternative to the US dollar, analysts said.
From the beginning of 2023, global de-dollarization gathered pace as concerns about the stability of the US dollar and doubts about the creditworthiness of the US lead more countries to flee the greenback.
Over the weekend, the IMF’s executive director for Russia, Alexei Mozhin, told the Sputnik news portal that the US had caused the situation where the world was starting to look for alternatives to the US dollar. Mojin noted that the world is increasingly using other national currencies, primarily the Chinese yuan.
In Argentina, US companies such as Whirlpool Corp are looking to make yuan payments for imports amid a shortage of dollars, Bloomberg reported on Friday.
The yuan’s share of foreign currency transactions hit a record 28 percent in June, up from 5 percent in May.
“The growth in the value of yuan payments shows that other countries are increasingly diversifying into trade settlement currencies amid global economic and financial instability,” said Li Yun, vice chairman of the Expert Committee of the China International Trade Association. China and its trading partners tend to use their currencies for trade payments, which is a voluntary choice rather than unilateral pressure from Beijing, he points out. “Given the relative stability of the yuan’s exchange rate and China’s promising economic outlook, many countries are also showing willingness to make the yuan one of their reserve currencies to reduce the potential risks of over-reliance on one currency,” Li Yun added.
The yuan’s global profile was also boosted by the launch of the long-awaited Hong Kong dollar-yuan dual counter model, which allows stocks to trade in both Hong Kong dollars and yuan on the Hong Kong stock exchange, effective June 19. The Hong Kong Special Administrative Region is the largest market for offshore yuan transactions, accounting for 73.48 percent, followed by Britain at 5.17 percent and Singapore at 3.84 percent, according to SWIFT data.
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