HONG KONG, March 27 (Reuters) - Taiwan, a latecomer in developing offshore yuan business, has overtaken the United States and Australia to be ranked fourth in payments using the Chinese currency, or renminbi (RMB), said global transaction services organisation SWIFT.
RMB payments made by Taiwan grew by 120 percent in the past six months and nearly 44 percent of all payments made between Taiwan and China/Hong Kong are now exchanged in RMB.
The island now trails behind the United Kingdom, Singapore and France in terms of RMB payments, excluding Hong Kong and China, said SWIFT.
“These are not surprising growth figures given the historic and increasing level of direct activity between the Chinese mainland and Taiwan,” Lisa O‘Connor, RMB Director at SWIFT, said in a statement.
Six months ago, Taiwan was ranked seventh out of 131 countries/regions exchanging RMB payments worldwide, with 24 percent of all payments between Taiwan and China/Hong Kong made using RMB.
Business in offshore yuan took off after a yuan clearing bank was assigned to Taiwan in late January, leading local financial institutions to compete fiercely to attract yuan deposits and launch yuan products.
Chinatrust Financial, Taiwan’s top credit card issuer, successfully issued the first yuan bond in the island and Deutsche Bank is now in the market to sell a two-tranche yuan bond.
Taiwan’s financial regulator has also given permission for Fuh Hwa Securities Investment Trust to set up the first yuan denominated mutual fund which will raise up to 20 billion yuan ($3.22 billion), two sources told Reuters on Monday.
China’s policies are favorable to Taiwan’s yuan business. Schemes such as Renminbi Foreign Direct Investment (RMB FDI) and Qualified Foreign Institutional Investor (RQFII), which took years to launch after Hong Kong’s yuan market came into being, are available for Taiwan investors from the beginning.
The world’s second-largest economy has stepped up efforts to make the yuan more widely accepted by global investors and corporates, aiming to make its currency fully convertible in the coming years and on a par with the dollar.
The yuan was ranked the 14th most widely used world payments currency in February, a position down from a month earlier, according to SWIFT.