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Aruba, October 6, 2015 - China’s yuan overtook Japan’s yen to become the fourth most-used currency for global payments, shrugging off a surprise devaluation to rise to its highest ranking ever and boosting its claim for reserve status.
The proportion of transactions denominated in yuan climbed to a record 2.79 percent in August, from 2.34 percent in July, according to a Society for Worldwide Interbank Financial Telecommunications statement on Tuesday. It was second for global issuance of letters of credit by value with a 9.1 percent share, compared with 80.1 percent for the U.S. dollar.
The report comes as the International Monetary Fund prepares to conduct a twice-a-decade review of its Special Drawing Rights basket, which currently comprises the U.S. dollar, euro, yen and the British pound. China has been pushing the yuan’s case for inclusion, which Standard Chartered Plc estimated could trigger as much as $1 trillion of inflows into the currency. The People’s Bank of China on Aug. 11 devalued the yuan reference rate by 1.9 percent and switched to a more market-oriented fixing, spurring a 2.6 percent slide in the currency in August.
"The data are positive for the probability of the yuan getting into the SDR basket," said Nathan Chow, an economist at DBS Group Holdings Ltd. in Hong Kong who predicted in January that the currency would surpass the yen in global usage this year. "It shows that the so-called devaluation in August, which wasn’t massive in value, hasn’t driven people away from using the yuan."