Yuan Maintained 5th Position in Global Currency Payments



China’s yuan maintains its position

SWIFT is a global member-owned cooperative and the world’s leading provider of secure financial messaging services. According to the latest SWIFT RMB Tracker, the yuan accounted for 2.5% of global payments in January, slightly up from 2.3% in December 2015. The yuan came in at the fifth position, one step behind the Japanese yen, which accounted for 3.1% of global payments in January 2016.

In January 2016, the top three international payment currencies were the US dollar with a 43.0% share, the euro, and the pound, which commanded shares of 29.4% and 8.7%, respectively.

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According to the latest SWIFT report, Malaysia’s use of the yuan for payments with China and Hong Kong rose 68% in 2015 and 214% over the last three years. Since January 2013, the Chinese currency moved from position number three to position number two for payments by value, overtaking the Malaysian ringgit.

According to Michael Moon, head of payments for Asia-Pacific at SWIFT, “Despite volatility in China, and widely reported economic slowdown, the South-East Asian markets, such as Singapore, Thailand and Malaysia, have been enhancing RMB payment capabilities, including the establishment of RMB clearing centres. This growth reflects the extensive trading relationships between South-East Asia and China, which continues to be very important for the region.”

Impact on mutual funds

The rise in yuan usage in international payments does not directly impact the performance of China-focused mutual funds such as the AllianzGI China Equity Fund–Class A (ALQAX) and the Eaton Vance Greater China Growth Fund–Class A (EVCGX). These funds are invested in American depositary receipts (or ADRs) of Ctrip.com International (CTRP), 58.com (WUBA), Taiwan Semiconductor (TSM), CNOOC Limited (CEO), and China Mobile Limited (CHL).

However, the rise in yuan usage does show that the Chinese currency is gaining importance in global markets for direct payments, which would benefit the entire country.

For more updates and analysis on mutual funds, please visit Market Realist’s Mutual Fund page.


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