Yuan Strengthens Position, Edging Closer to Surpassing Pound in Global Trade

The Yuan is moving up the leaderboard of global currencies. Recent data show its share of foreign exchange turnover has jumped. That rise puts the yuan within striking distance of the British pound as the fourth most used currency in trade and finance. Markets, policymakers, and traders are taking notice.

Yuan Gains Momentum in Global Trade

Recent Data from the BIS Survey

The Bank for International Settlements’ latest triennial survey found the yuan’s share of global FX trading rose to 8.5% in April 2025. That is up sharply from the last survey and reflects faster use of renminbi for cross-border deals. The BIS data are the clearest formal signal that the yuan is gaining market share

Why is the BIS survey important? Because it captures real transaction volumes across more than 1,000 banks and dealers. The survey shows actual trading behaviour, not just sentiment.

Yuan’s Share in Forex Markets

Bloomberg reported that the yuan’s daily trading volume climbed to roughly $817 billion a day, putting it much closer to the pound’s turnover level. The yuan’s growth is driven by increased use in Asia, expanded offshore trading hubs, and more yuan-denominated settlement of trade. These factors are reshaping daily FX patterns.

Why the Yuan is Rising Against the Pound

Trade Settlements and Cross-Border Deals

China has pushed for more trade settlement in yuan. State firms and exporters are increasingly accepting renminbi. That reduces reliance on the dollar and euro for bilateral trade. For many Asian trading partners, using the yuan is now cheaper and faster. This practical shift is driving up the currency’s real use.

Why is the Yuan rising now? Because more firms are settling trade in renminbi, and China is easing friction in yuan clearing and offshore transactions.

Role of BRICS and China’s Trade Partners

The wider political and trade landscape supports yuan growth. Partnerships within BRICS and closer ties with Southeast Asia have encouraged yuan invoicing and investment.

China’s trade diplomacy and currency-clearing networks in Hong Kong and elsewhere have made the yuan a more convenient choice for regional players. Hong Kong, in particular, continues to be a major offshore yuan hub.

How Yuan’s Rise Impacts Global Currencies

Pressure on the Pound Sterling

Sterling has lost some share as global trading patterns shift, and the pound’s relative role as the fourth-largest trading currency is now under pressure. Rising yuan turnover means the pound may lose ground in daily FX trading rankings and in trade invoicing choices, especially for partners trading heavily with China. Reuters and other outlets note this changing dynamic.

Could the yuan overtake the pound? Yes, the BIS numbers suggest it’s possible soon if current trends continue.

Dollar and Euro Dominance Still Firm

Despite these shifts, the U.S. dollar remains dominant in global payments and reserves. The euro also retains a strong place in trade. The yuan’s rise is meaningful but not yet a threat to the dollar’s central role in global finance. The change is about diversification, not dollar replacement.

Investor and Market Reactions to Yuan Growth

Tweets and Social Media Buzz

Market commentators and traders reacted quickly on social media. Analysts highlighted the BIS figures and Bloomberg volumes, noting the yuan’s newfound clout in global FX desks. Online threads emphasize both the practical drivers and the geopolitical context of this shift.

Global Analysts on Yuan’s Trajectory

Analysts point to three main drivers: expanded yuan clearing, trade settlement shifts, and China’s policy nudges to internationalise the currency. Many see the yuan’s climb as a gradual process that will unfold over years, not weeks. Still, the trend’s persistence in the data has raised expectations in markets.

Risks and Challenges Facing the Yuan

Regulatory Hurdles and Capital Controls

The yuan’s wider adoption faces limits. China retains capital controls and regulatory levers that can limit free conversion. That structure is a core reason many global players still prefer the dollar or euro for reserve and settlement functions. Any long-term rise for the yuan requires continuing liberalisation of markets and clearer access for foreign investors.

What could slow the yuan?
Policy tightening, capital controls, or weak market confidence could curb its momentum.

Market Confidence and Volatility Risks

Foreign investors watch both China’s policy choices and geopolitical tensions. The yuan can be volatile during periods of capital flow stress. If markets sense risk, they may retreat from renminbi positions. That leaves the currency’s path upward vulnerable to sudden changes in investor sentiment.

The Future Outlook for the Yuan

Will the Yuan Surpass the Pound Soon?

Data suggest the yuan is on pace to match or surpass the pound in certain measures of FX turnover. If current trends hold, the renminbi could become the world’s fourth-most-used currency in trade and forex liquidity in the near term.

However, the timeline will depend on continued market reforms and steady progress in international clearing channels.

Long-Term Global Currency Shifts

A stronger yuan changes the menu of options for trade partners. Over time, this could shift invoice currencies, reserve allocations, and regional financial architecture. 

But the dollar and euro will remain central for many years. The yuan’s rise is a major development, yet it is part of a slow, layered evolution in global finance.

Conclusion

The Yuan has strengthened its global standing. BIS survey data and trading volumes show tangible progress. The renminbi is closing the gap with the pound as trade and settlement patterns shift across Asia and beyond. This trend signals a more multi-currency world for trade and finance. 

For policymakers, investors and firms, the message is clear: expect more use of the yuan, plan for diversification, and watch policy moves closely. The rise is meaningful, but the road to top-tier reserve status is long and depends on reforms, trust, and stable markets.

Disclaimer

This is for information only, not financial advice. Always do your research.