By Michelle Chen HONG KONG, March 13 As the competition to become the leading offshore yuan centre in Europe intensifies among candidates such as London, Luxembourg and Frankfurt, the quiet growth of yuan business in the Americas may have caught many by surprise. With its well-established financial infrastructure and unique time zone, New York's yuan market share is increasing as more companies have started to adopt the yuan to settle trade transactions and capitalise on yuan products to hedge FX risk. The United States was ranked fourth (excluding China and Hong Kong) in terms of customer initiated and institutional payments denominated in yuan in January, up from sixth a year earlier, according to global transaction services organisation SWIFT. The United States has an offshore yuan market share of 7.3 percent, following the UK at 25.7 percent, Singapore at 25.2 percent and Taiwan at 9 percent. "New York's growth as an offshore renminbi centre has been relatively organic, largely based on local needs for settlement of renminbi-denominated trades in the Americas time zone," said Kelvin Lau, an analyst at Standard Chartered Bank. The bank recently included New York in its renminbi globalisation index after it did a roadshow in the city, finding that the Chinese currency was seen by local investors as the key investment opportunity in Asia ex-Japan. Companies there increasingly make use of the yuan in trade settlements, not only because they are able to enjoy attractive discounts offered by Chinese counterparts, but also a faster process to get the transations done, bankers say. The United States is China's biggest trading partner. In 2013, China's exports to and imports from the U.S. stood at $521 billion, accounting for 12.5 percent of China's total trade, statistics from the General Administration of Customs of China showed. The huge trade volume means even if a small percentage of the total is redenominated in the redback, the absolute figure is likely to be considerable. Along with this, companies make more use of yuan derivatives to manage their FX exposure. However, China's trade surplus with the United States may make growth in yuan deposits in the country difficult, which is different than the situation in Taiwan, where yuan deposits have risen quickly thanks to heavy trade volumes as well as China's trade deficit with the island. The obstacles to challenge the dollar's dominant global position may also prove especially big in the United States and any further yuan penetration into the world's largest economy will take time. Beijing is making great efforts to promote its currency to foreign trading partners and investors, which has already seen some success. Yuan trade settlement took up nearly 30 percent of China's total trade in February, compared to 2 percent in 2010. The Chinese currency surpassed the Swiss franc to become the seventh most-used world payments currency in January, having overtaken 22 currencies in the last three years. The pace is set to accelerate as regulators are reforming China's domestic market faster than expected. The central bank governor said to liberalise the country's deposit rates in one or two years, the most explicit timeframe to date. WEEK IN REVIEW: * China will continue to increase the quotas for Qualified Foreign Institutional Investors (QFII) and RQFII this year, Xiao Gang, Chairman of the China Securities Regulatory Commission (CSRC) said on Tuesday in the annual parliament session. * Haitong International listed an exchange-traded fund (ETF) tracking China's CSI300 index on Friday, which is the first RQFII ETF managed by a securities firm. The quota for the fund is 2 billion yuan. * Index compiler MSCI plans to include China's mainland-based A shares in its benchmark emerging market index from May 2015, as the country gradually opens up its domestic yuan markets to foreign investors. * Taiwan will launch an exchange-traded fund (ETF) platform for investors to trade in mainland China stocks this year, the chairman of Taiwan's Financial Supervisory Commission said in a statement to lawmakers on Wednesday. * The Airport Authority Hong Kong (AAHK) will consider issuing dim sum bonds to raise part of the money needed for the construction of the third runway and other related projects, Hong Kong's Wen Wei Po quoted Hui Hon-chung, Chief Executive Officer of the AAHK as saying. CHART OF THE WEEK: Offshore yuan business picks up in the U.S. as shown by SWIFT data:RECENT STORIES: CNH Tracker-Volatility keeps high grade offshore yuan debt in favour More stories about the CNH market Daily onshore yuan reports Daily China money market reports Offshore yuan rate Onshore yuan rate Offshore yuan dealt Onshore yuan on CFETS THOMSON REUTERS SPEED GUIDES
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