THE use of the Chinese yuan as a currency for world payments fell two places to seventh in February, with a share of 1.81 percent, according to the Society for Worldwide Interbank Financial Telecommunication, or Swift, in a report yesterday.

    That compares with a record-high 2.17 percent in December, according to the organization that is used by banks to coordinate international transactions.

    The 20.4 percent drop compared with January is a reversal from November, when the yuan broke into the top five of world payment currencies last year, overtaking the Canadian dollar and Australian dollar by value. Over the last two years, several new clearing centers for the yuan have emerged across the world as China has promoted the yuan abroad.

    “The global volume of payments in yuan will fluctuate, and is actually down by value compared with last month,” Michael Moon, head of payments Asia-Pacific at Swift, said in a statement. “But the broader support by more countries, underlining its international use, suggests the potential for future clearing centers and further development of the currency.”

    Swift attributed the decline to the seasonal effects of the Lunar New Year holidays earlier this year, but it follows an investor survey of 1,610 international companies by HSBC Holdings last week that showed overall use of the yuan by global companies had dropped 5 percentage points over the past year, hit by sharp moves in global foreign-exchange markets.

    Swift said that global payments in the yuan are increasingly being handled by offshore yuan hubs besides Hong Kong, as more clearing banks have been assigned. Though Hong Kong still takes the lion’s share with over 70 percent of the market by value, offshore centers excluding Hong Kong handled 25 percent of global yuan payments in February, compared with 17 percent two years ago.

    Singapore and London, which are strong financial centers in their respective regions, played a key role in driving yuan adoption outside of Hong Kong, Swift said.

    As China gears up to make its case for inclusion in the International Monetary Fund’s special drawing rights (SDR), an international reserve asset that can supplement member countries’ official reserves, Chinese authorities in recent weeks have pushed ahead with opening up access for foreign investors.

    The inclusion of the yuan in the IMF’s SDR would mark a major step in the currency’s internationalization process. The eligibility depends on a country’s share in world exports and whether its currency is freely usable. (SD-Agencies)