Data from the international SWIFT system reveals that the Chinese yuan has achieved a significant milestone by surpassing the euro to become the world's second-most utilized currency in trade settlements. This development underscores China's ongoing endeavours to enhance the global status of its currency.
As of September 2023, the yuan accounted for 5.8% of international payments, representing an increase from 4.82% in August. This marks the highest share of the yuan in the last five years. Nevertheless, the US dollar continues to maintain its position as the dominant currency in worldwide trade, boasting an 84.15% share in September, which is a slight uptick from the 83.95% it held in August.
The euro, on the other hand, has now slipped to the third position in international payments, with its share declining to 5.43% in September from 6.43% in August. Following the yuan in prominence are the Japanese yen and the Saudi rial, securing the fourth and fifth positions, respectively.
This achievement occurs against the backdrop of China's sustained efforts to expand its economic influence on a global scale. Although the yuan's portion of global payments remains relatively small when compared to the size of China's economy, it has exhibited steady growth from approximately 1.81% five years ago.
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a cooperative society headquartered in Belgium that furnishes services pertaining to the execution of financial transactions and payments between banks across the globe. In the realm of SWIFT payments, the US dollar and the euro have conventionally reigned supreme, collectively representing over 70% of payments in 2023.
The rise of the yuan in international trade settlements reflects China's expanding economic prowess and its endeavours to elevate the yuan to the status of a global reserve currency. Nonetheless, it's important to note that the yuan's share remains minuscule in comparison to the dollar's substantial 46.6% share.
China implemented the yuan as its currency system in the late 1800s and has maintained a currency peg since 1994. This peg, coupled with China's robust export-oriented economy, has facilitated the gradual acceptance of the yuan in the realm of global trade.
The most recent SWIFT data signifies a discernible shift in the worldwide financial landscape. The growing prominence of the yuan is emblematic of China's increasing role in international trade and finance.
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