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China increases trade in yuan
January 22, 2013, 3:58 pm

USdollarand yuan

Some believe that the yuan could replace the US dollar in Asian trading. [Getty Images]

In a sign that China’s economy is quickly rebounding, more countries are opening up to the option of trading in its national currency, the yuan.

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, also known as renminbi, is likely to experience higher demand as the currency of choice for some countries trading with China.

Increased use of the yuan indicates greater confidence in China’s economy regaining its momentum.

Last week, an AFP poll of 15 economists forecast 7.7 per cent growth for 2012’s fourth quarter and 8 per cent for the beginning of 2013.

A similar poll conducted by Reuters forecast 7.8 per cent growth for 2012’s fourth quarter, while Bloomberg predicted 8.1 per cent for the same period.

But analysts are warning that inflation could stem the country’s economic growth.

In the meantime, increased trading in the yuan is likely to gain momentum.

“We’re preparing for the day when renminbi becomes fully convertible,” Li Xiaojing, general manager of Bank of China’s New York branch, told the Wall Street Journal in early January.

Source: Agencies