The Chinese currency is newly in the league of the most traded world currencies

The Chinese currency is newly in the league of the most traded world currencies

For the first time ever, the Chinese currency ranks among the most traded international currencies, underlining the rise of the world’s second largest economy

In the last report on foreign exchange turnovers of the (BIS) Bank for International Settlements in Basle (CH), the Chinese currency now ranks ninth, surpassing the Swedish Krona and the New Zealand Dollar.

EM-AX011A_YUAN_G_20130905090008Trading in Renminbi has more than tripled over the past three years reaching up to USD 120 billion a day during 2013. Daily trading volume of the USD in 2013 (up to April) has been on average USD 4.65 trillion. Thus, the Chinese currency will play a larger role in a market long dominated by the dollar and to a lesser extent of the EUR. In 2010 the Chinese currency ranked 17th. The noteworthy shift highlights the international nature of the manufacturing supply chain and the flexibility large firms can gain by using the Chinese currency.

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TextileFuture has been reporting before that the Chinese government is interested to have several hubs abroad for the trading of its currency, and that it allowed before that goods and services might be paid in Renminbi in the Asian area.

London is still dominating as foreign exchange place with 41 % of daily average currency trading, in 1998 the share settled at 32.6 %. The share of the U.S. currency market rose only slightly in the past 15 years, namely from 18.3 % to 18.9 %.

More can be had from the tables published by WSJ Wall Street Journal above.

In the league of the ten top currencies we find the Mexican Peso, it entered the list for the first time in 1998. Both the Chinese and Mexican currencies doubled their market shares. The Russia’s Ruble, Turkish Lira, South African Rand and Brazilian Real accounted for a bigger share of global flows, while the Korean Won and the Polish Zloty accounted for slightly smaller shares.  Also the Japanese Yen has been shooting higher, namely 63 % from its 2010 level. Trading in dollar against the Yen was up around 70 %.

It is an interesting fact, that Remnibi payments by American companies were up almost 90 % in the first half of 2013 against 2012 and has attained 2 % of all U.S. payments to Chin, or up from 8.5 % in the semester of 2012.

Since China has established Hong Kong as its first offshore trading centre for its currency in 2009, competition between global and regional financial hubs to be key Renmimbi markets has been heading up. Singapore and London have emerged as the leading candidates, with Tokyo, Sydney, Luxembourg, Kuala Lumpur, Switzerland and Germany, are also vying for a spot.


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