Surprise with the position of the Yuan in international payments

China's renminbi (RMB) share in global payments hit a record high in July 2024, a milestone in the country's efforts to challenge the US dollar's leading role.

The share of the Chinese yuan in global payments is at a record high. (Source: Stockphoto)

Data from SWIFT, the world's largest interbank messaging service, showed that the yuan held the fourth position in the list of currencies used in international payments last month, with its share of global transactions rising to 4.74% from 4.61% in June 2024.

This is the ninth consecutive month that the proportion of China's currency has remained above 4%.

According to SWIFT data, in July 2024, the US dollar accounted for 47.8% of global payments, followed by the euro at 22.5% and the pound sterling at 7%.

Share in international payments is the main figure showing the relative position of international currencies. Other figures include frequency of use in foreign exchange markets, commodity trading and government foreign exchange reserves.

The data showed that the value of payments in yuan increased by 13.4% compared to June 2024, far exceeding the 10.3% increase recorded across all currencies.

The world's second-largest economy first encouraged the use of its currency in international trade payments in 2009, in an effort to respond to the global financial crisis.

The bulk of the $240 billion worth of trade between China and Russia last year was settled in yuan or rubles.

Chinese policymakers have continued to call for the yuan to be used as an alternative currency in international trade. In response, countries such as Brazil have expressed greater openness to accepting the Chinese currency.

Ding Shuang, chief China economist at Standard Chartered Bank, said that while the yuan has been under pressure to depreciate, the internationalization of the currency has progressed this year, with increasing use overseas.

As countries in Africa, Latin America and developing Asia seek to avoid over-reliance on the US dollar amid rising geopolitical tensions, the yuan is well-positioned to expand its global role, Ding said.

The yuan has surpassed the yen to become the world's fourth most active currency in global payments by November 2023, after the US dollar, euro and pound sterling.

Source: https://baoquocte.vn/bat-ngo-voi-vi-tri-cua-nhan-dan-te-trong-thanh-toan-quoc-te-284443.html