Renminbi becomes world's No.7 payment instrument

Want China Times, Kuo Chih-yun and Staff Reporter 2014-03-01

Renminbi banknotes. (Photo/Xinhua)

The renminbi has become a more popular payment instrument in the international market, where its ranking had risen to seventh place in January, up from eighth place in December, with transactions in the currency concentrated in Hong Kong, according to SWIFT — the Society for Worldwide Interbank Financial Telecommunication — on Feb. 27.

The renminbi's market share hit 1.39% in January, up from 1.12% a month earlier, according to the latest SWIFT report. 73% of renminbi-denominated payments took place in Hong Kong, followed by the UK, Singapore, Taiwan the US, France, Australia, Luxembourg and Germany.

In January, the US dollar remained the foremost international currency, boasting a 38.75% market share, followed by the euro with 33.51%, the pound with 9.38%, the Japanese yen with 2.49% and the Canadian dollar with 1.8%.

The renminbi is moving quickly up the rankings, as it ranked only 12th in August last year. In addition, it has become the second-most important currency for trade financing, replacing the euro, according to the SWIFT.

Hong Kong remains the primary offshore renminbi market, although other offshore markets such as the US and Taiwan have been developing rapidly, a trend which will further boost the status of the Chinese currency in the international market.

State Street of the US and the Economist Intelligence Unit published the result of a survey of 200 institutional investors on Feb. 27, which shows that 53% of respondents believe the renminbi will eventually overtake the US dollar to become the world's most important reserve currency.