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Bookmark(ECNS) — More than 60 countries and regions have adopted the Chinese renminbi (RMB), or yuan, as a new reserve currency, according to the latest report on renminbi internationalization by the People’s Bank of China.
Since last October, the International Monetary Fund (IMF) has included China’s currency in its Special Drawing Rights (SDR) basket as an international reserve currency, along with the U.S. dollar, the euro, the Japanese yen and the British pound.
This inclusion has further promoted the international use of RMB. The European Central Bank invested 500 million euros of its reserves in renminbi-denominated assets during the first half of this year.
The yuan’s cross-border financial transactions will continue to grow, as settlements using the currency reached 9.85 trillion yuan ($1.49 trillion) to conduct cross-border trade settlements by the end of 2016.
The report also said about 240,000 onshore companies were using the yuan to conduct cross-border trade settlements by the end of 2016.
The Belt and Road Initiative has further driven the global adoption of the yuan. More and more market players are expected to use yuan for settlement thanks to China’s economic growth and improved foreign exchange regime, according to the report.
Data from transactions organization SWIFT showed that China’s yuan is increasingly being used by financial institutions for global payments by value, with a market share of 1.85 percent, ranking 6th among most-used currencies.
The PBOC report said China will further improve the market-based RMB exchange-rate regime to make the exchange rate more flexible and also ensure the stability of the RMB in the global currency system.
Zhang Yu, a researcher at Renmin University of China, said the RMB as an international payment currency will become easier in Asia and especially Southeast Asia. Zhang also forecast a stronger RMB later this year.
The yuan’s central parity exchange rate reached 6.5991 against the U.S. dollar on Wednesday.
ECNS Wire
10/20/2017
