Yuan overtakes US dollar, becomes most-used currency in cross-border transactions
This photograph taken on February 9, 2023 shows a Chinese yuan banknote and US dollar banknotes in Moscow. (Photo by Kirill KUDRYAVTSEV / AFP) (Photo by KIRILL KUDRYAVTSEV/AFP via Getty Images)
SHANGHAI: Chinese Yuan becomes the most-used currency in cross-border transactions leaving behind the US dollar, according to official data.
According to a Reuters report, in March, the Chinese yuan became one of the most widely-used currencies for cross-border transactions in China leaving behind the US dollar for the first time in history. According to official records, the move reflects China’s efforts to “internationalize” its currency.
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In March, cross-border payments showed a rise in the use of yuan recorded by up to $549.9 billion from $434.5 billion a month prior, reported Reuters, based on data taken from the State Administration of Foreign Exchange. Per their calculations, the news outlet gathered approximately 48.4% of all cross-border transactions were made with the yuan. On the other hand, transactions with the US dollar declined to 46.7 percent from 48.6 percent earlier.
Left to right: US President Joe Biden and Chinese President Xi Jinping.
The move can be taken as a win for China, which has long been working to promote its yuan for cross-border transactions and trade, under efforts to internationalize its currency. It is worth mentioning that the volume of total cross-border transactions includes both current and capital accounts.
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Largely, the use of the yuan in international trade remains low, however, the steady increase is a testament that there is a noticeable change. Likewise, data from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) shows a rise of 4.5 percent in global current transactions made with the Chinese yuan meanwhile, the dollar only accounted for 83.71 percent.
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