CHINA’S yuan is expected to take a 13 percent market share of global reserves by 2030, an HSBC survey of global reserve managers showed, suggesting that China’s stepped up efforts to open its markets to foreign investments will have some pay-off.

    The survey was carried out in March and drew on responses from 72 central banks, which manages US$5.9 trillion in reserves, or 48 percent of global reserves.

    The yuan’s rise will be a gradual one, accounting for 2.9 percent of global reserves by the end of 2015, 6.9 percent by 2020, 10.4 percent by 2025 and 12.5 percent by 2030, the survey revealed.

    Thirty five central banks, or 53 percent of respondents, said they were either investing or considering investing in yuan assets now, but channels to China’s domestic markets were limited for them.

    “Investment opportunities are still limited as regards liquidity of markets and diversification within the market mainly due to credit risk considerations,” said a European reserve manager.

    Foreign central banks have been buying Chinese assets in the onshore interbank bond market as well as in the offshore dim sum market. Their purchases are usually biased toward high-quality investment-grade bonds issued by central governments or policy banks.

    China sent a strong message to the International Monetary Fund (IMF) in March, urging that the yuan be included in its special drawing rights (SDR) basket, promising it would strive for further reforms and aim for full convertibility this year.

    China has also taken steps to open up its markets to foreign capital and has been pushing for the increased use of the yuan for trade and investment with a broader goal of eventually putting its currency on par with the U.S. dollar.

    So far, more than 50 foreign central banks have started to use the yuan or keep it as part of their foreign reserves, according to industry estimate.

    China has signed currency swaps with 31 countries worth 3,120 billion yuan (US$502.02 billion) to encourage bilateral trade and investment.

    Although central banks already started to have exposure to the yuan, how fast it becomes a large reserve currency will depend on the growth and stability of the economy, pace of the internationalization and the deepening of China’s financial markets, said a surveyed reserve manager. (SD-Agencies)