Recent SWIFT data shows that RMB usage in traditional trade finance – Letters of Credit and Collections – grew from an activity share of 1.89% in January 2012 to 8.66% in October 2013, propelling the RMB to the second most used currency in this market. It ranks behind the USD, which remains the leading currency with a share of 81.08%.
The RMB overtook the euro, which dropped from 7.87% in January 2012 to 6.64% in October 2013 and is now in third place. The top 5 countries using RMB for trade finance in October 2013 were China, Hong Kong, Singapore, Germany and Australia.
“The RMB is clearly a top currency for trade finance globally and even more so in Asia, as shown by SWIFT’s business intelligence statistics on the pace at which China’s exporters and importers and their counterparts use the RMB for Letters of Credit,” says Franck de Praetere, Head of Payments and Trade Markets, Asia Pacific, at SWIFT.
In October 2013, the RMB remained stable in its position as the #12 payments currency of the world, with a slightly decreased activity share of 0.84% compared to 0.86% in September 2013.
Overall, RMB payments increased in value by 1.5% in October 2013, whilst the growth for all payments currencies was at 4.6%.
Noel Quinn, Group General Manager and Regional Head of Commercial Banking for HSBC Asia Pacific, says RMB usage will continue to grow. "In the next five years, we expect the RMB to be fully convertible and have forecast that over half of China’s trade with emerging markets will be settled in RMB in that time," he says.
"However, the vast majority of businesses outside of Greater China still haven't taken full advantage of the RMB for cross border transactions. As the internationalisation of the RMB gathers pace, businesses must start preparing to unlock the potential of the RMB in international trade."