Source: CCTV.com 04-27-2009 11:05

The dollar is still the preferred settlement currency around the world. But many exporters and importers at the China Import and Export Fair are willing to settle trade in Renminbi.

China is allowing a small number of exporters at the ongoing Canton Fair to trade in yuan. Industry insiders say the move could help manufacturers, as huge foreign exchange losses are caused by the fluctuation of the US dollar.

Ms Xu, exhibitor at Canton Fair, says, "we welcome yuan settlement. The US dollar usually dominates our trade, putting us in quite a passive position for a very long time."

Many importers also support the idea of yuan settlement. But some worry that it might not be convenient to exchange renminbi in other countries.

Many importers say the stability of the yuan exchange rate is quite attractive, because trading in yuan can help avoid sharp falls in profits. But some are also very cautious about trade carried out in renminbi, as, unlike the British pound and the Japanese yen, the Chinese yuan is not accepted around the world.

Lian Ping, chief economist of Bank of Communications, says, "it is possible to carry out large amounts of yuan-Hong Kong dollar exchange in China. But nobody could do that in the US. The exchange should not only take place inside China, but also in the rest of the major economies around the world So the renminbi can truly become an acceptable currency for everyone."

Experts believe it will take a long time before a new reserve currency emerges. And the yuan's convertibility under capital account is just one of the steps that the currency has to take to boost its popularity.