Renminbi Enters Top 10 of Most-used Currencies for Payments
The Chinese renminbi (RMB) has entered the top 10 of most-used currencies for payments in terms of value, according to SWIFT. The financial messaging provider said that in December 2013 the currency overtook the Singapore dollar (SGD) and the Hong Kong dollar (HKD) to climb to eighth position in the rankings.
RMB payments increased 15% in December from November, while those for other currencies rose 7%, according to SWIFT. In October, the RMB overtook the euro (EUR) to become the second-most used currency in trade finance.
Over the past three years it has overtaken a total of 22 currencies. With a 1.12% market share, the RMB is now challenging the Swiss franc (CHF), whose current market share is 1.29%.
“A question is whether the RMB will continue its climb – or at least maintain its status as a ‘top 10’ currency for payments,” said Franck de Praetere, head of payments and trade markets, Asia-Pacific, at SWIFT. “We might expect it to fall back during the first quarter 2014 as a result of the Chinese New Year, as we have seen previously.
“The fact that between November and December 2013 other currencies grew 7% while the RMB grew 15%, however, might suggest that use of the Chinese currency is becoming business as usual for the world’s financial institutions and corporates.”
Responding to SWIFT’s announcement, John Laurens, regional head of global payments and cash management, HSBC Asia Pacific commented: “The RMB continues to solidify its position as a global currency and we expect that within the next five years it will become convertible.
“It is essential that international treasurers remain attuned to RMB developments as part of their global liquidity strategy in order to capitalise on the opportunities the currency provides.”