Tags: US | companies | yuan | dollar

US Companies Using Yuan in Record Quantities

By    |   Thursday, 10 July 2014 02:17 PM

The amount of yuan utilized by U.S. companies has reached a record high, as they seek to save on currency expenses.

The companies' yuan-based payments soared by a multiple of four over the last year, reaching a record 2.6 percent of total yuan transactions worldwide, according to the Society for Worldwide Interbank Financial Telecommunication, The Wall Street Journal reports.

U.S. importers often receive a superior deal from Chinese suppliers if they are willing to pay in yuan, according to the paper. That's because the suppliers don't have to worry about receiving dollars that could lose value.

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And U.S. companies operating in China need yuan for expenses such as salaries and office supplies.

"More and more of our payments will migrate to the renminbi now that it's easier to do so," Ryan Hershberger, Ford Motor's treasurer of Asia-Pacific, told The Journal. "We think the benefits will accrue over time."

Increased yuan usage by U.S. companies, which has proliferated since China began loosening restrictions on trading the yuan outside of the country in 2009, could help China in its effort to establish the renminbi as a reserve currency.

And it might be working, according to The Journal. The yuan is used in more than 18% of China's total trade, up from less than 1 percent five years ago, according to Bank of China Ltd., the newspaper reports. And last year, the Bank for International Settlements noted that the yuan was the ninth most actively traded currency globally.

After pushing the currency down earlier in the year, Chinese authorities have let it continue its rise of the past few years. The yuan hit a three-month high of $6.1940 Wednesday.

U.S. officials have pushed their Chinese counterparts to allow further appreciation, including in talks this week.

"There's political pressure for yuan gains given the U.S.-China talks," Banny Lam, co-head of research at Agricultural Bank of China, tells Bloomberg. "China is likely to report another record foreign-exchange reserves, which means the PBOC [central bank] will allow more appreciation."

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The amount of yuan utilized by U.S. companies has reached a record high, as they seek to save on currency expenses.
US, companies, yuan, dollar
356
2014-17-10
Thursday, 10 July 2014 02:17 PM
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