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China's yuan back to fifth most-used world payment currency

China's yuan back to fifth most-used world payment currency

China’s yuan bounced back to be the fifth most-active currency for global payments in July, thanks to a big fall in payments in other currencies, global transaction service provider SWIFT said on Wednesday.

The yuan’s market share increased to 1.9 percent in July from 1.72 percent in June. While the overall yuan payments declined by 0.68 percent from June, payments in all currencies fell by 10.08 percent, SWIFT said.

China’s “redback” follows fifth behind the U.S. dollar, the euro, sterling and the Japanese yen.

The Chinese currency fell to the sixth place in April as volatile foreign exchange rate and China’s sluggish economy dampened foreign investors’ appetite for yuan assets.

SWIFT data also showed that yuan payments in South Africa increased by 65 percent over the last 12 months and by 112 percent in the last two years.

Nearly 40 percent of yuan payments by South African institutions were offshore payments exchanged with countries other than China/Hong Kong, compared to 16 percent a year earlier.

“The establishment of a yuan clearing centre in South Africa in July 2015, as well as Singapore’s increased use of the yuan for payments with South Africa, have been a catalyst for yuan growth in the region,” said Harry Newman, head of banking at SWIFT.

China and representatives from 50 African countries signed a Memorandum of Understanding (MOU) on the Promotion of China-Africa Cooperation last December. The MOU is expected to increase commercial exchanges between China and the African continent and to boost yuan volumes in the future.

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