In the past three years, the Chinese Yuan overtook the Australian and Canadian Dollars and the Swiss Franc to become the 5th most-traded currency in the world, according to the Bank for International Settlements (BIS). The development comes as China is seeking to overtake the U.S. as the dominant global power.
Last week BIS released the results of the central bank survey it conducts once every three years. The survey was passed on a study of the number of average daily currency trades in April of this year. Since taking the same survey it’s last survey in 2019, BIS found the Chinese Yuan moved from the eighth to fifth place spot as the most-traded currency.
The 2022 survey results still found that the U.S. Dollar remains the most-popular global currency by a wide margin. The Euro was the second most-popular, following by the Japanese Yen and then the British Pound in fourth place.
Out of a total of 7,508,391 currency trades reviewed, BIS found the U.S. Dollar was used in 6,641,411 cases, meaning it was used in 88.4 percent of all currency trades. That represents a slight uptick from about 88.3 percent of currency trades in the 2019 survey result.
By comparison, the 2022 BIS survey result found that the Chinese Yuan was used in 526,411 currency trades, or about seven percent of all trades.
The Euro was used in 30 percent of currency trades, while the Japanese Yen was used in 16.7 percent of currency trades and the British Pound was used in 12.9 percent of trades.
While the U.S. Dollar is still used more than 12 times as often in global currency exchanges, the Chinese Yuan’s usage has increased as China has expanded its influence in global markets.
The Saudi Arabian government has sold oil exclusively for U.S. Dollars since 1974; however, Wall Street Journal reported earlier this year that the Saudi government was considering allowing oil sales to China under the Yuan.
The Bank of Israel, which serves as Israel’s central bank, began using the Chinese Yuan for the first time in April. At the same time, the Israeli central bank reduced its share of U.S. Dollars and Euros.