Saturday, December 9, 2023

China uses yuan more than dollar in cross-border operations for the first time

China used the yuan more than the dollar in its cross-border transactions for the first time last March, a new milestone in its plans to reduce its dependence of the US currency, points out today a Bloomberg Intelligence study based on government data.

Specifically, the use of yuan in this type of operations reached its all-time high (48%) in March, the month during which the use of the dollar in transactions Chinese cross-border carriers fell to 47%.

It should be noted that in 2010, China practically did not use its own currency to settle this kind of transaction, and it was done almost exclusively in dollars, the use of which in that year was 83%.

This rate It is calculated based on the volume of all types of cross-border transactions carried out in the country, including the purchase and sale of shares through the links linking the markets of mainland China and Hong Kong.

“He increase of the use of the yuan could be a natural consequence of China opening its capital account, with increasing inflows for bonds Chinese and exits for shares of (the) Hong Kong Stock Exchange,” he explained. Stephen ChiuBloomberg Intelligence currency analyst.

However, the Chinese currency continues to have a share of only 2.3% in payments globally, according to data from the Payments SWIFT international

China has been looking for increase the use of its currency for global cross-border transactions, and this Tuesday, the State Council (Executive) reiterated its intention to increase the use of the yuan to settle such operations internationally.

“The internationalization of the yuan is accelerating as other countries look for an alternative payment currency to diversify risks, since the credibility of the Federal Reserve (American) is not as good as it used to be,” said Chris Leung, an economist at DBS Bank.

Despite this, the expert added that dollar it still has a long way to go as the currency of choice internationally: “The yuan’s share in global payments could be small forever.”


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