Yuan

April

<p>A recent Bloomberg Intelligence (BI) analysis, based on data from the State Administration of Foreign Exchange, reveals that the Chinese Yuan now accounts for 48% of China&#8217;s cross-border payments and receipts, up from virtually zero in 2010. This marks a new record high for the local currency.</p>



<figure class="wp-block-image size-full"><img width="936" height="508" src="https://www.cryptopolitan.com/wp-content/uploads/2023/04/image-619.png" alt="image 619" class="wp-image-295917" srcset="https://www.cryptopolitan.com/wp-content/uploads/2023/04/image-619.png 936w, https://www.cryptopolitan.com/wp-content/uploads/2023/04/image-619-300x163.png 300w, https://www.cryptopolitan.com/wp-content/uploads/2023/04/image-619-768x417.png 768w, https://www.cryptopolitan.com/wp-content/uploads/2023/04/image-619-24x13.png 24w, https://www.cryptopolitan.com/wp-content/uploads/2023/04/image-619-36x20.png 36w, https://www.cryptopolitan.com/wp-content/uploads/2023/04/image-619-48x26.png 48w, https://www.cryptopolitan.com/wp-content/uploads/2023/04/image-619-150x81.png 150w" sizes="(max-width: 936px) 100vw, 936px" /><figcaption>Source: <a href="https://www.bloomberg.com/news/articles/2023-04-26/yuan-overtakes-dollar-as-china-s-most-used-cross-border-currency" rel="nofollow noopener" target="_blank">Bloomberg</a></figcaption></figure>



<h2 id="dollar-8217-s-share-declines">Dollar&#8217;s share declines</h2>



<p>Meanwhile, the US dollar&#8217;s share has dropped from 83% to 47% over the same period. The percentage is calculated using the total volume of transactions, encompassing securities trading through connections between Hong Kong and mainland China&#8217;s financial markets. Stephen Chiu, BI&#8217;s chief Asia foreign-exchange and rates strategist, explains that the rise in yuan usage could be a natural outcome of China&#8217;s capital account opening up and increased inflows to Chinese bonds and outflows to Hong Kong stocks.</p>



<p>The trend is expected to continue, as China&#8217;s State Council announced on April 25 that the nation will further expand the use of the yuan for cross-border transactions in order to boost international commerce.</p>



<h2 id="yuan-8217-s-impact-on-dollar-dominance">Yuan&#8217;s impact on Dollar dominance</h2>



<p>Although the yuan&#8217;s growing role represents a challenge to the dollar, it remains small. Chris Leung, an economist at DBS Bank, points out that while yuan internationalization is accelerating, it still has a long way to go before it can significantly disrupt dollar dominance. According to SWIFT, the yuan&#8217;s share of global payments remained stable at 2.3% in March.</p>



<p>This information emerges as the yuan weakens against the US dollar. On April 26, the China Foreign Exchange Trade System reported a 390-pip drop in the central parity rate of the yuan, or renminbi, to 6.9237 against the dollar. Former Treasury Secretary Larry Summers recently dismissed the idea of the yuan posing a significant threat to the dollar, citing China&#8217;s capital outflows and market unreliability.</p>

Chinese Yuan gains ground in cross-border payments, US Dollar share declines

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