Rising demand for yuan settlement amid Middle East tensions is driving record transaction amounts in China’s cross-border payment system, analysts said, building on years of efforts to bolster financial infrastructure and expand its global network.
“The Middle East conflict may have acted as a catalyst,” said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered, citing rising demand for yuan settlement, particularly in oil trade.
China’s Cross-border Interbank Payment System (CIPS) recently saw its single-day transaction value reach a record high of 1.22 trillion yuan (US$178.5 billion), with nearly 42,000 transactions processed, according to the state-owned Shanghai Securities News on Thursday.
The surge follows strong momentum in March, when the system’s average daily transaction value climbed to 920.45 billion yuan – the highest level in a year and a nearly 50 per cent rise from February’s 619.74 billion yuan. Average daily transaction volume also rose to 35,740, up sharply from 25,930 in February.
Ding added that the recent rise has also been supported by the yuan’s relative stability, China’s investment in cross-border payment infrastructure, and a growing number of CIPS participants.
In the longer run, an expanding yuan-payment network will also support the [currency’s] adoptionXu Tianchen, Economist Intelligence Unit
The yuan has been on a steady upwards trajectory in recent months; as of the noon session on Thursday, the offshore yuan was trading at around 6.834 against the US dollar. A lower yuan exchange-rate figure indicates a stronger Chinese currency, as it takes fewer yuan to purchase one dollar.