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A record year for foreign renminbi exchange

Publication Date : 19-02-2014

 

The Cross-border RMB Index developed by Bank of China Ltd to measure renminbi activity in the global market rose by a record 56 points in the fourth quarter of 2013 year-on-year, BOC reported Tuesday.

The index stood at 228 in December, breaking the threshold of 200 for the first time.

"The growing profile of China's trade in the global market has boosted the growth of renminbi settlement," said BOC President Chen Siqing. "In the fourth quarter last year, renminbi settlement in China's imports and exports increased by 30 per cent over the previous quarter, pushing CRI up by 20 points."

In 2013, China's merchandise trade exceeded $4 trillion, making it the world's No 1 trading country.

Total cross-border renminbi settlement was 5.16 trillion yuan, up 61 per cent year-on-year. Under the current account, the proportion of yuan-dominated merchandise trade went from 5.5 per cent in 2011 to 11.7 per cent in 2013. In terms of capital account, renminbi-dominated direct investment increased by 130 per cent from the end of 2012.

"The globalization of the renminbi is growing at a remarkable pace," said Chen. "The outflow of the currency has been consistently higher than inflow as the offshore yuan market expands."

In 2013, about 500 billion yuan ($82.4 billion) entered overseas markets through trade or investment. It is estimated that the renminbi in overseas market may have exceeded 1.5 trillion yuan.

According to BOC statistics, dollar activity in the fourth quarter last year increased by 2 per cent from the second quarter. Meanwhile, euro, pound and yen activity decreased.

In comparison, renminbi activity increased by 23 per cent during the same period. "Although renminbi is becoming more active overseas, we still have a long way to go to internationalize the currency," Chen said.

Chen sees another record rise in the currency's profile due this year, saying BOC's clients have reported higher confidence in yuan-dominated settlement.

In a survey among 3,000 global companies in 2013 by BOC, more than 70 per cent said they believe the renminbi would become a major international currency.

Among overseas companies surveyed, 61 per cent said they would begin using renminbi or increase its proportion for settlement, while 79 per cent said the reason they were going to use renminbi more frequently was because of deeper economic association with China's mainland.

BOC continues to take the lead in yuan-dominated settlement. In 2013, BOC's cross-border renminbi-dominated settlement exceeded 3.98 trillion yuan, rising by 60 per cent year-on-year. Its domestic settlement was 1.77 trillion yuan, taking up one-third of the market, much greater than other commercial banks.

 

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