RPT-FX trading slump deals blow to China's renminbi ambitions

(Repeats late Wednesday item)

* Beijing’s intervention earlier this year seen as driver

* Overall global FX volumes grew

LONDON, July 26 (Reuters) - Foreign exchange turnover in the Chinese renminbi in the world’s biggest currency centres declined in April, surveys showed, dealing another blow to China’s attempts to promote the trading of its currency in global markets.

Since it was included in the International Monetary Fund’s special drawing rights basket last October for the first time, the renminbi’s “internationalisation” has gone into reverse across various metrics.

Latest available data from London, the world’s biggest foreign exchange centre, showed daily average turnover in the Chinese currency was $34 billion in April , down 15 percent from last October.

Data from New York revealed an even bigger drop in volumes, by more than a quarter to $1.43 billion.

“The growing concerns from the large trading banks on whether the Chinese authorities will continue with their reform agenda earlier this year probably weighed on turnover,” said Martin Arnold, a global currency and commodity strategist at ETF Securities in London.

Earlier this year, Beijing resorted to interventionist tactics in both onshore and overseas currency markets by selling dollars aggressively, and by strengthening measures to slow capital outflows from China.

Those measures triggered a funding shortage briefly in the offshore currency markets in Hong Kong sending borrowing costs shooting up to double digits, hitting companies and burning speculators.

The renminbi’s share as an international payments currency declined to 1.6 percent in May from 2.3 percent in December 2015, according to global payments tracker SWIFT.

“There has been some heavy-handed intervention in the overseas currency markets earlier this year and that has sapped market confidence in trading the renminbi,” an emerging market strategist said at a U.S. bank.

Its gains this year, at less than 3 percent following a 7 percent decline in 2016, have also significantly lagged some other emerging currencies.

The Indian rupee has gained nearly 6 percent so far in 2017.

Beijing’s interventionism has also pushed away bond investors, especially in China’s overseas markets denominated in the renminbi.

Offshore bond issuance in the yuan totalled 10.74 billion yuan ($1.59 billion) in June, down two-thirds year on year, according to Thomson Reuters data. ($1 = 6.7530 Chinese yuan renminbi) (Reporting by Saikat Chatterjee; editing by John Stonestreet)