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Trading in swaps is a means for two countries to exchange a specific amount of each currency, followed by a payment of interest.
The Corporation, which is the municipal governing body of most of the UK’s financial sector, also said that daily currency swaps of the yuan, also known as the renminbi, had reached nearly $3.1 billion a day as China’s currency gained more traction in international markets.
“Transaction volumes in London are growing strongly which reflects a growing confidence in London as a center of renminbi business,” Mark Boleat, policy chairman for the City of London Corp., said in an emailed statement carried by Bloomberg.
According to Bloomberg, “the UK Chancellor of the Exchequer George Osborne is pushing for London to become an offshore center for yuan trading to deepen links with the world’s second-largest economy.”
The latest figures will likely please Chinese authorities that have been pushing for making the yuan a popular currency among traders on par with the US dollar and the euro.
Yi Gang, vice governor of China’s central bank China, has been particularly determined to pursue the internationalisation of the yuan on a market-oriented basis.
“It is the basic policy of the People’s Bank of China (PBOC) to let the renminbi compete with US dollar or euro fairly in the international market,” Gang said in an interview on the sidelines of the annual meeting of the World Economic Forum (WEF) last week.
The news also comes a China says it will not apply quantitative easing policies for the yuan, even as other nations appear to manipulate their currencies to minimise trade deficit. Beijing says it will apply a “neutral position” to stabilise money supply.
“This year, the government will maintain the necessary increase of money supply and market liquidity through yuan holdings for purchasing foreign exchange, central bank bills and open market operations,” said the State Information Center in an article published on the China Securities Journal on Monday.
Although its value is tightly controlled by government measures, the Bank of China opened its trading in the US in early January.
This follows similar trading in Hong Kong in July 2012.
Demand has been rising since then; Taiwan, Singapore and Australia are already using it as a trade currency.
Quoting statistics from Standard Chartered Bank, Forbes says the yuan, is likely to experience higher demand in 2013 as the currency of choice for some countries trading with China.