China flexes monetary muscle
Data from global transaction services organization, SWIFT show China’s yuan overtook the euro in October to become the second-most used currency in trade finance.
The market share of yuan usage in trade finance, or Letters of Credit and Collection, grew to 8.66% in October, from 1.89% in January 2012.
The yuan now only ranks behind the US dollar – the greenback still dominates world trade with a share of 81.08%.
The euro’s share of international trade finance is now 6.64%.
The top five countries using the yuan for trade finance in October were China, Hong Kong, Singapore, Germany and Australia.
Seeing Australia on the list is not surprising since almost all of the country's number top exports – iron ore and coal – is bought by China.
The 1.1 billion tonne global seaborne iron ore trade which is expected to grow by as much as 34% over the remainder of this decade is second only in size to crude oil imports and exports.
China dominates the global trade in just about every commodity including iron ore (representing 70% of world trade), copper(42%), coal (47%), nickel (36%), lead (44%) and zinc (41%).