The move is widely seen as the first step in China's objective of positioning the yuan as an alternative international trading currency and reducing reliance on the U.S. dollar. 

On 8 April, China announced that it would permit Shanghai and four cities in Guangdong province, including Shenzhen and Guangzhou, to settle international trade using the yuan. This will ease the burden on Chinese companies operating overseas, who currently have to convert their yuan into dollars or other currencies for settling international trade payments.

In a separate development, the Hong Kong Monetary Authority announced that yuan deposits with authorised institutions in Hong Kong rose 0.8 per cent in May, to RMB53.4 bn, "representing about two per cent of the foreign currency deposits."

Keywords : Hong, Kong, Yuan, Dollar, Trade, Payments, Shanghai, Shenzhen, Guangzhou

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