Bloomberg reports that the Chinese yuan has been making inroads in the world of cross-border payments in recent years, but a pair of data points due this week will reveal whether the country’s sudden industry crackdowns have dented international trust in the currency.
The Swift and China’s foreign-exchange regulator will both announce figures this week that together paint a picture of the yuan’s role in international trade and investment. Previous data through June showed a steady increase in its use but that was before a regulatory crackdown escalated in July.
The authorities scaled up their anti-monopoly attacks against the nation’s largest technology companies, banned profits in the after-school tutoring industry, and launched a critique of online gaming.
The share of yuan payments via Swift increased to 2.46% in June, just under the peak reached in March that was the highest level since a shock devaluation in August 2015. The percentage of cross-border transactions that were conducted in the currency increased to 42.3% in the same month, close to January’s record high of 43.8%.
Since the devaluation, China has since worked to revive the yuan’s popularity, urging greater use of the currency in trade and easing exchange-rate controls and intervention.
Global funds boosted holdings of Chinese government bonds to a record in July despite that month’s market turmoil, and inflows are expected to continue as some of the securities will be included in FTSE Russell’s flagship global index this October.
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