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RMB Internationalization Soars: Hits Record High in Global Payments, Becomes Fourth Most Commonly Used Currency

© Reuters. RMB internationalization improves!Global payment share hits record high, becoming fourth most commonly used currency

Financial Associated Press, December 22 (Editor Bian Chun)The yuan’s share of global payments hit a record high last month, becoming the fourth most widely used currency for the first time since early 2022, according to the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

In November, the RMB’s share of global payments rose to 4.61% from 3.6% in October, surpassing the Japanese yen’s share, which fell from 3.91% to 3.41%.

This is the first time since January 2022 that the RMB has surpassed the Japanese yen, becoming the fourth most commonly used currency in the world after the U.S. dollar, euro and pound.

The world’s other major currencies also saw their share of global payments decline in November. The US dollar fell from 47.25% to 47.08%, the euro fell from 23.36% to 22.95%, and the British pound fell from 7.33% to 7.15%.

Although individually the shares of the top three currencies (US dollar, euro and pound) and the yen did not change much, their combined shares fell by more than 1 percentage point.

From an annual comparison, the latest data shows thatThe yuan’s share of global payments has almost doubled compared with November 2022, when it accounted for 2.37%

RMB internationalization further improved

The background of the steady increase in the share of RMB in global payments is thatChina is working hard to internationalize the yuanto break the global hegemony of the US dollar.

Last month, the yuan’s share of total cross-border loans jumped to 28%, while China’s central bank now has more than 30 bilateral currency swap agreements with foreign central banks including Saudi Arabia’s central bank and Argentina’s central bank.

In addition, Russian Prime Minister Mikhail Mishustin said this week that more than 90% of trade between Russia and China is settled in RMB or rubles, according to the official Russian news agency TASS.

With the continued development of RMB-denominated international bonds and the rise of overseas RMB loan business, in September this year, the RMB replaced the euro and became the world’s second largest trade financing currency.

Economists pointed out thatChina’s low interest rates make yuan more competitive in trade finance. China’s one-year loan benchmark interest rate is currently 3.45%, while the lower limit of the U.S. federal funds rate is 5.25%.

also,Western sanctions on countries including Russia have also strengthened the case for greater use of the yuan in global payments.these sanctions have made other economies nervous about the possibility of wider weaponization of the dollar.

“The acceleration in yuan payments partly reflects the geopolitical situation we are seeing,” said Mansoor Mohi-uddin, chief economist at Bank of Singapore. “This and longer-term trends in trade flows are likely to accelerate the use of the yuan.”

Chi Lo, senior Asia Pacific strategist at BNP Paribas Asset Management, commented that this year there has been a series of positive developments that are conducive to the international use of the renminbi.November Swift data ‘may even be the start of a slow upward trend in yuan share’
2023-12-22 00:24:00
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