(Bloomberg) — China’s yuan fell two levels to a seventh place among the most-used currencies in the global payment system in February, according to the Society for Worldwide Financial Telecommunications.
The currency’s market share declined to 1.81 percent, a 20 percent decline from January, according to Swift, the financial-messaging service. The drop was likely due to fewer transactions during the one-week Chinese New Year holiday, the La Hulpe, Belgium-based organization said.
While the slip in the ranking may be influenced by the seasonal effect, it also underscores China’s challenge to promote the yuan as an international reserve currency as the economy slows while capital outflows push up foreign-exchange volatility. An annual survey by HSBC Holdings Plc. showed this month that 17 percent of companies worldwide used the yuan to settle trades, down from 22 percent a year earlier.
The yuan strengthened Monday as Chinese authorities took steps to boost the property market to prop up growth. The currency gained 0.14 percent to close at 6.2077 per dollar, erasing its decline for the year, China Foreign Exchange Trade System prices show.
China will revamp its foreign-exchange rules “relatively radically” this year, People’s Bank of China Governor Zhou Xiaochuan told the Boao Forum for Asia, an annual conference on the southern Chinese island of Hainan Sunday. Earlier this month, Zhou called for the International Monetary Fund to add the yuan to its basket of four reserve currencies, known as Special Drawing Rights, or SDRs.
The U.S. dollar and the euro dominate the global markets, accounting for 72 percent of the payment system in February, the Swift data showed. The Chinese yuan trailed the British pound, Japanese yen, Swiss franc and Canadian dollar.