Yuan joins ranks of top-10 traded currencies
Print Edition
China’s yuan has joined the ranks of the most traded currencies for the first time, underlining the growing might of the world’s second-largest economy.
The yuan became one of the top-10 traded currencies in 2013, rising to No. 9 on the list due to a “significant expansion” in offshore trading, the Bank for International Settlements has said in a report. It’s a sharp jump from the bank’s last survey in 2010, when the yuan was No. 17 on the list.
Turnover in trades involving yuan surged to US$120 billion a day on average in April, three and half times more than the US$34 billion in 2010. Still, that figure is dwarfed by the US dollar, which accounted for about US$4.7 trillion daily.
The Bank for International Settlements, which is an international organization of central banks, said the yuan along with the Mexican peso, which rose to No. 8, “saw the most significant rise in market share among major emerging market currencies.”
China wants the yuan to become an international currency and has been promoting its use as an alternative to the dollar.
The yuan is not yet fully convertible but Beijing has been gradually loosening controls. It has started allowing companies to settle international transactions in yuan, signed currency swap deals with Pakistan, Thailand, South Korea and others and has worked with financial centers such as London and Hong Kong to develop international hubs for offshore trading of the currency.
Earlier this year, China and Australia agreed that their currencies could be directly exchangeable, making the Australian dollar the third major currency to have direct convertibility, after the US dollar and the Japanese yen. The deal eliminates the need to exchange Australian dollars for US dollars in order to buy yuan and vice versa.
In other findings, Singapore overtook Japan to become the biggest foreign currency trading center in Asia and the third-largest in the world, behind Britain and the United States.
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