Global demand for yuan on the rise
Beijing's efforts to promote currency paying off as trade settlement and holdings in yuan by foreign central banks are on an upward trend
Beijing's efforts to promote the yuan by developing the offshore yuan business are well supported by increasing trade settlement with the rest of the world in the currency, officials and industry experts said yesterday.
They noted that Asian and European central banks had been increasing their yuan holdings and the continuing appreciation in the currency was boosting its investment appeal for investors.
Speaking at the Paris Europlace Financial Forum yesterday, Norman Chan Tak-lam, the chief executive of the Hong Kong Monetary Authority, the city's de facto central bank, said "globally, demand for [yuan] is inevitably on an upward trend, with increasing trade settlement between China and the rest of the world, as well as investment activities on the mainland, both of which should lift the popularity of the Chinese currency overseas".
HKMA figures show trade settlement in yuan in Hong Kong rose 40 per cent in the first 10 months from a year earlier to 2.1 trillion yuan (HK$2.6 trillion), exceeding the full-year amount last year.
Outstanding yuan loans more than doubled to 70 billion yuan in October from about 30 billion yuan at the end of last year.
Under the "one country, two systems" principle, Chan said Hong Kong had a unique advantage over other offshore yuan centres because of its financial and regulatory infrastructure.
In 2003, Beijing introduced an offshore currency facility in Hong Kong so that overseas investors could use its banking services to tap into the mainland market. Taiwan gained yuan clearing status in August, and Singapore and London are vying to become offshore clearing hubs for Southeast Asia and Europe, respectively.
