RMB payments rise 33% in February as global payments fall
Renminbi-denominated payments rose by a third in February, propelling the RMB back to the 17th most-used payment currency, according to data from Swift’s monthly payment tracker.
After a temporary hiatus at the end of 2011 and the start of the new year, RMB payments surged last month, at a time when the total volume of global payments fell 0.3%.
|Are RMB payment volumes returning to growth trend seen in 2011?
| Source: Swift
The increasing share of worldwide payments in RMB has returned the Chinese currency to 17th most-used payment currency, after falling to 20th position last month.
Australia least likely to transact in RMB
Swift data show that among China’s five biggest trading partners in Asia, RMB payments in February with Australia were the lowest in the region.
For several of China’s trading partners, the US dollar is the main trading currency, but in the case of Australia, transactions for imports and exports have been predominantly in Australian dollars, a convention which takes time to change, according to Wim Raymaekers, head of banking markets at Swift.
MT103 payments – transactions made by banks on behalf of corporates – are a close proxy of trade-related payment flows.
These payments show that Chinese payments to Australia – reflecting payments for Chinese imports– were 70% in AUD and just 10% in RMB.
Looking at Australian payments to China – reflecting payments for Chinese exports – the difference is even more pronounced, with just 2% of transactions denominated in RMB.
The reason behind this is that it is easier to replace a third currency, such as the US dollar, rather than switch between domestic currencies when the trading partner’s currency has been used for so long.
“Australian companies are happy to carry on transacting in their native currency while Chinese exporters may be unwilling to jeopardize valuable trading relationships by requesting payments in RMB,” says Raymaekers.
A further, more general, reason suggested for the sluggish adoption of RMB as a trade-settlement currency is because Chinese exporters receive a tax rebate from their government for exporting goods. Receiving payment in foreign currency is likely to be the least complicated way of demonstrating this whereas payment received in RMB would potentially require more complicated means of proving eligibility for the rebate.
|RMB transactions with Australia among the lowest in Asia-Pacific region