(Yicai Global) Jan. 15 -- The Chinese yuan rose today following reports that Deutsche Bundesbank, Germany’s central bank, will start to include it in its foreign exchange reserves, demonstrating the increasing internationalization of the country’s currency.
China’s position as the world’s second-largest economy means that policy initiatives related to the yuan can have an impact on a global-scale, online news outlet Ifeng cited Andreas Dombret, a member of Deutsche Bundesbank’s executive board, as saying today.
The onshore yuan has continued to strengthen against the dollar since the start of the year and hit a two-year high of more than CNY6.42 today. The currency’s exchange rate against a range of other currencies remained basically stable.
There is a huge market demand for the expansion of the international use of the yuan, said Yin Yong, vice-governor of the country’s central bank, the People’s Bank of China, yesterday. Despite China representing the world’s largest trading nation, the currency's application in cross-border settlements accounts for a mere 25 percent, he added.
The yuan’s use on the international stage is far from sufficient at present when compared to the proportion of China’s contributions to the global economy, Yin said. For instance, the use of the yuan in international liquidation makes up about 1.8 percent, while the currency’s representation in global foreign exchange reserves is just over 1 percent.