Yuan transactions to reach $3tln by 2015--CCB

The currency has become more attractive since China ended a two-year peg to the dollar and investors bet on further gains.

Trade transactions settled in the Chinese yuan may rise to $3 trillion equivalent a year by 2015 as China pushes for the wider use of its currency as an alternative to major world currencies in business and finance, said China Construction Bank.

"The yuan market makes perfect sense for many reasons and we believe it will explode," Paul Schulte, Hong Kong-based global head of financial strategy at CCB International Securities Ltd. CCB International is a unit of China Construction Bank.

China Construction Bank forecasts an increase from the current $19 billion a year of yuan-denominated trade transactions, or commercial transactions primarily paid for and financed using the yuan that don't involve the dollar.

Demand for China's currency is escalating as the economy grew 9.6 percent in the third quarter. The currency has become more attractive since China ended a two-year peg to the dollar on June 19, and investors bet on further gains.

"It's natural for China to want to have control over its currency and the way to do that is to internationalize it," Schulte said. Hong Kong will develop a liquid market in the yuan, to provide "loans to Brazilian or Argentinean companies for Chinese goods like locomotives, electric turbines or health-care equipment," he said.

Companies have borrowed around 616 billion yuan ($93 billion) from China's domestic currency loan market this year, according to data compiled by Bloomberg. China also started allowing the yuan to trade against the Russian ruble, in a move designed to support further internationalization of the currency.

View the full story in the People Daily Online.