(Yicai Global) Sept. 26 -- Chinese yuan-denominated assets remain highly attractive to international investors as China continues to open up its financial markets, the country’s central bank said recently. This is despite the exchange rate sinking past 7.1 to the US dollar last week as the greenback continues to strengthen.

Onshore entities held CNY10.8 trillion (USD1.5 trillion) worth of yuan-denominated financial assets as of the end of last year, a 20.5 percent jump from the end of 2020, the People’s Bank of China said on Sept. 23. And the central bank will continue to drive the high-level two-way opening up of its capital markets and promote the smooth circulation of the onshore and offshore yuan markets, it added.

The integration of yuan and foreign currency capital pools by multinational companies will be further advanced to support the increased use of the redback in overseas investment, the PBOC said. Innovations in yuan cross-border investment and financing will be promoted through the construction of pilot free trade zones in the Guangdong-Hong Kong-Macao Greater Bay Area and Shanghai International Financial Hub.

The redback's internationalization level has been rising in recent years. As of the end of last year, the Chinese yuan had an overall internationalization index of 2.8. By comparison, the Japanese yen's internationalization level was 4.93, the British pound's 8.77, the Euro's 21.81 and the US dollar's 58.31.

More than 80 overseas central banks and monetary authorities have made the yuan one of their reserve currencies, according to incomplete statistics. The redback accounted for 2.8 percent of global forex reserves in the first quarter, a gain of 1.8 percentage point from 2016 when the currency was included in the International Monetary Fund’s special drawing rights, which is an artificial basket currency used by the IMF for internal accounting purposes.

The yuan’s use in cross-border payments has been growing steadily. In the first half, it accounted for nearly half all cross-border transactions at CNY20.3 trillion (USD2.8 trillion). This was a 5.7 percent gain from the same period last year.

In 2021, 78.8 percent of companies polled said they were considering using the redback or increasing their usage of the currency in cross-border trade, according to a poll of over 3,300 businesses, consisting of some 2,400 onshore firms and about 900 offshore firms. This was the same proportion as in 2020.

Editor: Kim Taylor