currency wars - Yuan is building a strong position in trade

Currency of the Republic of China has overtaken the euro and became the second most popular used to finance commercial transactions.

In a recent report, the Society for Worldwide Interbank Financial Telecommunication (SWIFT), participation of the Chinese currency in international trade finance transactions (eg letter of credit) rose in October to 8.7 percent from 1.9 percent in 2012. Yuan ahead in this respect, the euro, whose share fell at the same time from 7.9 percent to 6.6 percent. The participation of U.S. dollar still is not at risk and amounted in October 2013 81 percent.

Yuan is most often used to finance international trade transactions mainly by companies in China. They represent 54 percent of world trade, another 21 percent of transactions attributable to Hong Kong and 5 percent for Singapore, the 2 percent for Germany and Australia.

The recent plenum of the Communist Party of China accepted the reform program providing for, inter alia, liberalization of the capital market, which is likely to increase the popularity of the yuan in global markets. It is worth mentioning that in recent months the Republic of China signed an agreement allowing direct exchange of yuan to British pounds and Singapore Dollars.

One of the strategic objectives of the Chinese authorities is to make the yuan a global reserve currency with a similar status as the U.S. dollar.

Is expected that by the end of 2015 the participation of the yuan in international trade will increase to 30 percent.

regards,

oscarjp