CHINA’S currency is at last starting to make waves in international trade, after years trailing behind the country’s economy in terms of global importance.
The renminbi was the most-used currency in Asian trade with China and Hong Kong last month for the first time ever, according to data from communications network Swift.
In April, 31 per cent of payments in Asia Pacific with China and Hong Kong were denominated in renminbi, more than four-times the seven per cent level just three years earlier.
The figures show enormous growth in the use of the currency as the authorities have loosened their grip on the renminbi, gradually liberalising their approach to the foreign exchange markets.
However, on the global stage the renminbi still lags far behind, as it is used in just 2.07 per cent of international payments.
That compares with 45.14 per cent for the US dollar and 27.36 per cent for the euro.
Despite forecasts that the renminbi could become the second or even first global reserve currency in place of the dollar, the American currency has in fact become more important in recent years. At the start of 2014 the greenback was used in 38.75 per cent of international payments, indicating a remarkable surge in use of the currency in the last year.
The renminbi is closing in on the fourth-placed currency, the Japanese yen, which is used in 2.73 per cent of international payments.
And the third-most used is sterling, which is used in 7.96 per cent of transactions.
“Big trading partners like Singapore, Taiwan and South Korea have adopted the renminbi for the majority of their payments with Greater China,” said Swift’s Michael Moon.