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Yuan Surpasses U.S. Dollar to Become China’s Most Used Currency in Cross-Border Transactions

China’s efforts to give its yuan a more prominent role in international transactions are yielding positive results for the local currency. According to a recent report from Bloomberg, the yuan officially surpassed the US dollar to become the country’s most-used currency in cross-border transactions in March.

After accounting for less than 1% percent in 2010, the yuan has been used for 48% of cross-border transactions, valued at $549.9 billion, in China. On the other hand, dollar use dropped to 46.7% compared to 48.6% in February. For comparison, the dollar was used for 83% of cross-border payments and receipts in 2010.

“The rise in yuan usage could be a natural consequence of China opening up its capital account, with rising inflows for China bonds and outflows for Hong Kong stocks,” Stephen Chiu, chief Asia foreign exchange and rates strategist at Bloomberg Intelligence, wrote in a note.

However, the yuan didn’t make much movement on the global market, where it has a 4.5% share compared to the dollar’s 83.71%, according to data made available by SWIFT. This number might change in the future as a result of foreign economies looking to diversify risks by adopting alternative currencies, but the yuan isn’t expected to meet widespread acceptance anytime soon, if ever.

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