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July 22, 2017

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Yuan slips in rankings as value weakens against US dollar

SHANGHAI--Use of China's yuan as a global payments currency retreated in February, transactions organization SWIFT said, as the unit fell against the dollar.

The yuan dropped back to the eighth most-used currency for payments worldwide, the Society for Worldwide Interbank Financial Telecommunication said, just behind the Swiss franc traditionally seen as a safe haven for investors.

In January, it had risen above the Swiss unit to take seventh place.

On a value basis, global payments in yuan — also known as the renminbi (RMB) — plunged 8.5 percent in February from January, SWIFT said, but gave no amount.

SWIFT attributed the fall in ranking and transaction value to the long holiday for the Chinese New Year and the comparatively shorter month of February.

But the yuan weakened for much of February, at one point closing at an eight-month low.

Analysts believe the depreciation is a deliberate move by the People's Bank of China, the central bank, to target speculative funds betting on continued rises.

The slide in February also came before the central bank announced earlier this month a long-awaited reform, doubling the trading band for the tightly controlled currency against the dollar.

The yuan can now move up or down two percent daily — double the previous one percent — on either side of a mid-point set under the guidance of the central bank, which says it polls market makers.

So far this year the yuan has fallen around 2.6 percent against the dollar, erasing nearly all the gains from 2013, when it rose more than three percent.

SWIFT said Australia's yuan payments value surged a whopping 248 percent in February from the same month a year ago, but mainly due to investment and foreign exchange activities by institutions.

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