Yuan overtakes Yen in share of SWIFT transactions

By Rhod Mackenzie

The Chinese currency, the yuan, has overtaken the Japanese yen to become the fourth most used currency in international payments via the SWIFT system. Its share of the market has reached 4.7%, almost twice as much as last year. However, the data does not take into account the Russian market, where the volume of deposits is 0.5 trillion yuan. What is the reason for the success of the Chinese currency?
The impressive growth of the yuan in international payments via the SWIFT system has been further reinforced by the latest figures, which show that the share of the Chinese currency in March reached 4.7%. This represents a 25.44% increase compared to February 2024.
The dollar maintained its position as the leading currency, with its share increasing from 46.56% in February to 47.37% in March. The share of the euro in March decreased from 23.25 to 21.93%. The British pound is also in the top three, with a share of 6.57%, down from 6.9% recorded in February. This resulted in China finding itself in fourth place in world payments, overtaking the Japanese yen.
The previous record for Chinese currency in payments via SWIFT was recorded in November last year, with the yuan rising to 4.61%. Furthermore, in March 2023, this figure was 2.26%.
The share of the yuan in global payments excluding the eurozone is estimated at 3.18%. According to this indicator, the Chinese currency ranks fifth.
It is noteworthy that the data provided by SWIFT does not take Russia into account, points out economist Yegor Susin. Meanwhile, the Russian Federation is the second largest yuan centre after Hong Kong, with a volume of deposits exceeding 0.5 trillion yuan. Loans and bonds are valued at approximately the same amount. The share of the yuan in foreign trade is approximately 40%.

“Not all payments in yuan are seen by SWIFT, which is reflected in their assessment of the shares of the largest offshore centres of the yuan,” the expert notes.
China has also published its data regarding payments in yuan. Incoming and outgoing payments in national currency reached record highs, amounting to $319 and $330 billion, respectively.
China maintains a positive balance of payments in dollars, with a surplus of $198 billion per year. However, the balance in other foreign currencies is not as impressive, with a surplus of only $23 billion per year. In contrast, the balance of payments in the yuan is negative, with a deficit of $123 billion per year. China is gradually expanding its currency volume and liquidity in the offshore market.

The minimum value of the yuan this year reached 12.09 rubles, according to financial adviser and teacher at the Faculty of Economics of Moscow State University, M.V. Lomonosova Yulia Kuznetsova. This was recorded in January. At the same time, the value of the Chinese currency rose to 13.04 rubles in April. The last time this value was observed was in December last year. According to the expert’s forecast, the yuan may break through the value of 13.04 rubles, rising to 13.10 rubles. However, it will then decline.
It is important to note that the yuan follows the dollar-ruble exchange rate. Currently, both the dollar and the yuan are oversold. To stabilise it, we need to wait for new important events aimed at strengthening the ruble,” Kuznetsova believes.
The yuan earns points mainly due to the powerful economy of the People's Republic of China and the support of the national currency exchange rate by the People's Bank of China, notes Alexander Potavin, an analyst at Finam Financial Group. It is believed that the yuan is opposed to the US dollar as a promising rival.
The yuan is becoming a world currency thanks to the competent financial, industrial and investment policies of the leadership of the People's Republic of China, according to Sergei Gavrilov, coordinator of the deputy group for relations with the People's Republic of China parliament.

"For example, having become one of the largest producers of copper and aluminium, China has wisely invested in the nickel industry in Indonesia and expanded cooperation with Russia, which has enabled it to become the main player in the non-ferrous metals market." "It can set prices, which strengthens the position of the national currency in the world," the parliamentarian is convinced.
According to Potavin, sanctions played a key role in the promotion of the yuan, as a result of which Russian payments in dollars and euros made through SWIFT were blocked.

"Russian businesses were forced to switch to yuan payments due to China's emergence as a key trading partner. Other world currencies are no longer as reliable or liquid for Russia," the expert emphasises.

The yuan is also being traded by parts of the Global South, according to BCS Forex analyst Anatoly Trifonov.

"Previously, it was possible to pay for supplies in yuan only with the PRC. Now, a number of other Russian exporters are ready to accept payments in Chinese currency," he notes.
Gavrilov believes that the growing economic ties between Russia and China are based on a number of factors, including direct payments in national currencies, the mutual provision of food, energy and agricultural products, the development of transport corridors between countries, and the partial yuanisation of trade relations between Moscow and Beijing. In 2023, the figure reached 18 trillion rubles, with a projected increase to 35 trillion rubles by 2030.
The share of the yuan in global payments via the SWIFT system has risen in recent years, but this may be a temporary phenomenon, according to Alexander Potavin. The role of the Chinese currency in trade financing has already begun to decline in 2024.

“In this regard, it is too early to write off the dollar as a means of payment and a key reserve currency,” the analyst believes. The yuan remains a trading currency, and its popularity is growing due to the PRC's share in world sales.

For Russia, the transition to payments in national currencies, which led to getting rid of dollar dependence, has been a positive move. The country has been able to increase the value of the ruble. In the future, according to Sergei Gavrilov’s forecast, national currencies will be used in lending and in the stock markets of the Russian Federation, China and other BRICS countries. This will contribute to the industrial modernisation of Russia.
At the same time, the yuanisation of the Russian market reduces opportunities for foreign investment and transnational payments, Trifonov warns. Most countries continue to trade in dollars and euros, he recalls.

— Although the yuan has become a common currency on the Russian market, its share in the world remains small, being inferior not only to the dollar and euro, but also to the British pound. To increase the global prevalence of the yuan, a consistent policy on the part of the authorities is necessary, the expert emphasises. However, China, in his opinion, prefers a manageable yuan rather than a more liquid one on the international stage. Nevertheless, the Chinese currency has every chance of succeeding in its effort to displace the dollar, Gavrilov is sure. It is of the utmost importance to popularise the yuan in order to maintain China's global leadership in production and trade. This will have a positive effect on the country's economy, sovereignty and socio-political stability.