Direct Won-Yuan Trading Increased by Four Times

It has been found that the volume of direct trading between the Korean won and the Chinese yuan has broken the US$2.2 billion mark, more than quadrupling in just a year since the opening of the direct trading market in Seoul.

The Bank of Korea announced on Dec. 1 that the daily average trading volume in the market recently reached US$2.26 billion, equivalent to 26.4 percent of the won-dollar trading volume. Specifically, the former jumped 4.1-fold from US$880 million to US$3.63 billion between December last year and last month.

These days, an increasing number of Korean enterprises are using RMB in trade settlement. Its ratio in trade with China rose from 1 percent to more than 3 percent between last quarter of 2014 and third quarter of this year. The size increased from US$240 million or so to US$930 million between September last year and the same month of this year. The central bank is predicting that the size will continue to increase as the Chinese currency is going to be included in the IMF’s SDR basket. It also explained that yuan-based capital transactions will become more and more frequent as an increasing number of Korean financial companies are doing business in China with new investment products. “It is likely that the use of the RMB by Korean trading firms will skyrocket to US$50 billion until 2020,” it said.

Under the circumstances, the Ministry of Strategy & Finance and the central bank are planning to further enhance the convenience and stability of the direct won-yuan trading market. In this context, the exchange brokerage fee applied to the market has been reduced to be close to that for won-dollar brokerage. The two organizations are working on a simultaneous payment system for KRW and RMB, too.