HONG KONG - China's yuan has joined the ranks of the world's most traded currencies for the first time, underlining the might of the world's second-largest economy.
The yuan became one of the top 10 traded currencies in 2013, rising to ninth on the list due to a "significant expansion" in offshore trading, according to a new report by the Bank for International Settlements (BIS).
It's a sharp jump from the bank's last survey in 2010, when the yuan, also known as the renminbi, was 17th on the list.
Turnover in trades involving yuan surged to $120 billion a day on average in April 2013, three and half times more than the $34 billion recorded in 2010.
Still, that figure is dwarfed by the US dollar, which accounted for about $4.7 trillion daily.
The BIS, an international organisation of central banks, said the yuan along with the Mexican peso, which rose to No. 8, "saw the most significant rise in market share among major emerging market currencies".
China's leaders want the yuan to become an international currency and have been promoting its use as an alternative to the dollar.
The yuan is not yet fully convertible but Beijing has been gradually loosening controls. It has started allowing companies to settle international transactions in yuan.
As well, it has signed currency swap deals with Pakistan, Thailand South Korea and others and has worked with financial centres such as London and Hong Kong to develop international hubs for offshore trading of the currency.
Earlier this year, Australia and China agreed that their currencies could be directly exchangeable, making the Australian dollar the third major currency to have direct convertibility, after the US dollar and Japanese yen. The deal eliminates the need to exchange Australian dollars for US dollars in order to buy yuan and vice-versa.
In other findings, Singapore overtook Japan to become the biggest foreign currency trading centre in Asia and the third largest in the world, behind Britain and the United States.
The BIS report also found that the euro's international role has shrunk since the onset of the sovereign debt crisis in the 17-nation euro zone, with market share falling to the lowest since its introduction in 1990.
The bank surveyed 24 currencies in 53 jurisdictions for its report.