Chinese Renminbi Enters Top Ten of Most Actively Traded Currencies

Trading of the Chinese renminbi (RMB) in global foreign exchange (FX) markets has more than tripled over three years, reflecting the expansion of offshore trade and making it the ninth most-actively traded currency in the world, according to a survey by the Bank for International Settlements (BIS).

The survey showed the share of the RMB, which is only partially convertible, has doubled in three years to account for 2.2% of global turnover.

The Australian dollar (AUD) and the New Zealand dollar (NZD) also saw their shares of global FX trade increase, as Asian central banks in particular sought to reduce their exposure to the dollar and the euro, according to the
BIS Triennial Central Bank Survey of FX market trends
.

British sterling (GBP) and the Swiss franc (CHF) saw slight decreases in their market shares but retained their rankings among the top 10 most actively traded currencies and were joined in the group by the Mexican peso (MXN).

Daily turnover in the RMB has reached US$120bn, from US$34bn in 2010 when it was ranked the 17th most actively traded. “The role of the RMB in global FX trading surged, in line with increased efforts to internationalise the Chinese currency,” the BIS said in the survey.

The RMB currently ranks just behind the MXN which was eighth in the global ranking.Turnover in the Mexican currency reached US$135bn in April 2013, raising its share of global FX trading to 2.5%. The MXN, in joining the world’s 10 most actively traded currencies, has moved ahead of well established currencies such as the NZD and the Swedish krona (SEK).

The AUD is the fifth most-actively traded currency, with its share rising to 8.6% from 7.6% in 2010, while the NZD edged up from 1.6% to 2%. Both currencies have enjoyed demand over the past three years from Asian central banks, which have been keen to diversify their FX reserves into currencies other than the US dollar and the euro.

“By contrast, sterling, the Canadian dollar, the Swedish krona and, most notably, the Swiss franc lost ground in global FX trading in relative terms,” the BIS said.

While sterling remained the fourth most-actively traded currency, the GBP’s share of daily global turnover dipped to 11.8% from 12.9% in 2010 The CHF share also fell to 5.2% from 6.3%.

Among commodity-linked currencies, the Canadian dollar’s (CAD) share fell to 4.6% from 5.3% in 2010. It was the seventh most-active currency, according to the BIS survey.

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