Tuesday, October 13, 2015

BRICSPOST: Yuan Becomes the 4th Most Used Currency Globally

The BRICSPOST runs a couple of recent articles related to China. One article notes that SWIFT announced the yuan is now the 4th most used currency in the world moving ahead of the yen. Another article points out that China's foreign exchange (forex) reserves fell again in September. Quotes from both articles are just below.


China’s yuan overtakes yen to become 4th most-used currency 

"China’s yuan overtook the Japanese yen to ascend to fourth place among the most-used currencies in the global payment system in August, according to the Society for Worldwide Financial Telecommunications (SWIFT).
On Tuesday, Swift, the financial-messaging service said the yuan is now only after the U.S. dollar, the euro and the sterling in currency rankings.
The announcement boosts China’s attempts to promote the yuan as an international reserve currency.
Global yuan payments increased in value by 9.13 per cent in August, Swift said on Tuesday.
The Chinese currency reached a record high market share of 2.79 per cent in global payments for the month.
More than 100 countries used the yuan for payments in August, of which over 90 percent of flows were concentrated in 10 countries. Singapore processed 24.4 percent followed by the United Kingdom with 21.6 percent.
More than 1,700 financial institutions made worldwide payments in the yuan, up 14 percent from a year earlier.
China has called for the International Monetary Fund to add the yuan to its basket of four reserve currencies, known as Special Drawing Rights, or SDRs."

China forex reserves continue to fall in September 

"China’s foreign exchange reserves fell to $3.51 trillion at the end of September, the country’s central bank announced on Wednesday.
The reserves decreased by $43.26 billion in September, marking the fourth consecutive month of declines, according to the People’s Bank of China.
But the decrease was not as sharp as in August. The reserves dropped by a record $93.9 billion in August.
There have been two main reasons for the decline: the USD strength and capital outflows. China’s FX reserves are in USD and affected by the general USD movements. As the USD has gained 25% between Q2 2014 and Q2 2015, other currencies can be assumed to have weakened 25%, all else equal. Thus, the non-USD assets in China’s FX reserves (estimated to be 40% of total) have lost 25% in value,” according to Amy Yuan Zhuang, senior Asia analyst at Noredea Research.
Capital outflows have intensified in Q2 and Q3 this year as a result of growth concerns and the financial market turmoil during the summer. According to our estimates, after taking into account the trade account flows and FDI flows, a total of USD 180bn has flowed out of China in Q2 and USD 272bn in July and August,” said a Nordea statement."

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