The use of China’s renminbi for international payments saw a swift and steady incline over the last few years, but new data suggests the yuan’s popularity is dropping.
Payments processor SWIFT revealed new data last week that showed the value of international payments made in yuan declined 29.5 percent in 2016. The share of international payments held by yuan dropped to 1.68 percent, a decline of 0.63 percent.
The Canadian dollar overtook the yuan as the fifth-most used currency on the planet in 2016, reports added.
According to reports, the slowdown in China’s economic growth and volatility of the yuan exchange rate, as well as recent regulations controlling capital outflows, have contributed to the trend.
“Overseas merchandise buyers became reluctant to accept yuan against the backdrop of yuan depreciation,” said Hong Kong-based Mizuho Securities Asia Chief Economist Shen Jianguang in an interview with South China Morning Post. “The Chinese government also doesn’t want to see more yuan outflows, as they could be quickly converted into dollars and, in return, increase pressure on the exchange rate.”
He added that the government’s efforts to stabilize the yuan exchange rate have taken over as top priority for the People’s Bank of China to promote the yuan as an international currency.
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“Yuan internationalization will continue to benefit form major financial infrastructure milestones, such as the Cross-Border Interbank Payment System and additional yuan offshore clearing centers,” explained Michael Moon, head of SWIFT’s Asia-Pacific payments markets department.
China launched its cross-border yuan payments system in 2015 in an effort to promote the use of the currency across the globe at a faster and more affordable rate.
