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China’s yuan joins top 4 global currencies

China’s yuan joins top 4 global currencies
The Chinese yuan became the fourth most-used currency for cross-border payments in August, according to global transaction services organization SWIFT. It’s the first time, the yuan has moved ahead of the Japanese yen.

There was a “substantial” increase in the use of the Chinese currency in the final week of August, and came on the back of market volatility, according to a report by SWIFT. This was caused by concerns over the Chinese economy slowing down and Beijing’s devaluation of the yuan, the report added.

Data shows the yuan was used far less in global payments than the US dollar, the euro and the British pound. In August 2012 the yuan was twelfth on SWIFT's list.

The yuan was used in 2.8 percent of global payments in August, compared with 44.8 percent for the dollar, 27.2 percent for the euro and 8.5 percent for the British pound.

More than 100 countries used the yuan for payments in August, with over 90 percent concentrated in 10 countries. Most of those payments have been processed in Singapore (24.4 percent) and the United Kingdom (21.6 percent). Worldwide payments in the yuan were up 14 percent from a year earlier, and have been provided by more than 1,700 financial institutions.

READ MORE: Yuan won’t join IMF reserve currency basket till September 2016 

China’s devaluation was probably a factor which has boosted foreign exchange transactions in the yuan by value, according to SWIFT. Transactions increased by 20 percent in August from a month earlier.

The yuan recorded its biggest one-day loss in two decades of two percent in August following the devaluation. The Chinese regulator aimed at reviving faltering exports.

China has been pushing hard for the inclusion of the yuan in the International Monetary Fund (IMF) currency basket. Rivaling the dollar in the global financial system has been Beijing's ambition for the yuan since 2010, opening up clearing hubs for its currency in London and Frankfurt.

However, in August the IMF postponed the inclusion of the yuan in the reserve basket of currencies, extending the current composition (US dollar, euro, yen and British pound) by nine months from December 31. It praised China for progressively devaluing its currency against the US dollar, saying that would allow the market to play a greater role in determining the exchange rate. Nevertheless, the IMF said the yuan was still tightly controlled by the Chinese government. The US, IMF's largest shareholder, has long accused China of keeping the yuan undervalued to boost exports.