South Korea’s renminbi (RMB) payments value increased by 563% between June 2013 and June 2014, making South Korea number eight in the world for RMB payments value, excluding China and Hong Kong, according to the latest RMB Tracker issued by SWIFT.
Last month, 68.9% of all direct payments between South Korea and China/Hong Kong were in RMB, up from 32.8% in June 2013.
“We have been monitoring the use of the RMB in South Korea for a while, observing its fast growth over the past two years, particularly as more banks and businesses are using the RMB in international transactions,” said Michael Moon, head of payments, Asia Pacific, SWIFT.
“South Korea’s RMB payments growth is increasingly driven by customer payments, which are a good proxy for trade settlement.”
Moon added: “The announcement by South Korea and China in early July about setting up a new RMB clearing centre in Seoul will further benefit the trading activities between the two countries. This agreement establishes South Korea as an important offshore RMB clearing centre in North Asia.”
Overall, the RMB reinforced its position as the seventh most active currency for global payments and accounted for 1.55% of payments worldwide. RMB payments increased in value by 7.1% in June 2014, while at a global level, all currencies increased in value by only 1.4% during the same period.
Commenting on the latest SWIFT data, Martin Tricaud, chief executive (CEO) for HSBC Korea, said: “While China is Korea’s most important trade partner, receiving nearly a third of our goods exports, Korea has historically been underweight in the use of RMB. The latest SWIFT RMB Tracker, however, shows this is changing.
“Korea has taken a number of steps to support internationalisation of the RMB, including the Bank of Korea’s (BOK) bilateral swap agreement, official dialogue on RMB trade and investment and RMB:Korean won (KRW) direct convertibility. As a result, Korean companies are increasingly attuned to RMB developments as part of their global trade and liquidity strategies and they’re capitalising on the opportunities the currency provides.
“Korea’s increasing use of the RMB is indicative of the continued maturing of this important currency. We expect the RMB to be one of the top three global trade currencies by 2015 and we forecast that the RMB will be fully convertible within five years.”
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