95% of foreign firms to keep or raise yuan use, Bank of China

The Bank of China conducted a survey in February of 3,501 companies, including 2,488 domestic firms and 1,013 overseas entities. Ninety-five percent of the overseas respondents expect to sustain or increase their use of the Chinese yuan in cross-border settlements, with 34.5% forecasting an increase.

Among the overseas firms, 61.4% expect yuan transactions to remain unchanged and 4.1% expect a decline. The share anticipating a drop fell from more than 20% the previous year.

The survey found a rise in firms willing to hold yuan deposits. That proportion increased by 6.4 percentage points from last year to just over 30%, the highest level in five years. Respondents cited the currency’s relatively stable purchasing power as a reason for keeping or increasing yuan holdings.

The survey noted the People’s Bank of China manages the yuan’s value and has allowed the currency to appreciate in recent months. The report places these survey results alongside Beijing’s policy push to expand the yuan’s role in international trade and finance. President Xi Jinping has called for a “powerful currency” that is “widely used in international trade, investment and foreign exchange markets, and attain reserve currency status.” People’s Bank of China Governor Pan Gongsheng described the internationalization effort as “an integral part of the overall process of reforms and openness of China.”

The survey provides data on corporate currency choices as China promotes greater use of the yuan for cross-border business. Some analysts cited in the survey commentary expect the yuan to continue rising over the next five years.