The yuan makes its way, but without support from Europe

London plays a vital role in boosting global yuan usage. Bloomberg says that it’s the biggest offshore center for the currency in Europe, according to the Society for Worldwide Interbank Financial Telecommunications. In August, the yuan (CNY) became the fourth most-used currency in global payments with a 2.79 percent share, surpassing the Japanese yen.

The People’s Bank of China will sell as much as 5 billion yuan of one-year bonds in London in less than a month, marking its first such offering outside the country. The sales have “more to do with testing the ground,” said Li Liuyang, a Shanghai-based chief financial market analyst at Bank of Tokyo-Mitsubishi UFJ Ltd.

In this regard, Bloomberg  reports that China Construction Bank Corp. sold 1 billion yuan ($158 million) of Dim Sum bonds in London but only 1 percent of the buyers are from Europe. Investors from Asia took up 99 percent of the issuance, according to a person familiar with the matter, who isn’t authorized to speak publicly and asked not to be identified. The two-year notes were priced to yield 4.3 percent on Tuesday, the person said.

The sale comes ahead of President Xi Jinping’s U.K. visit next week and as China steps up efforts to win the yuan reserve- currency status at the International Monetary Fund.

Concerns related to the assumptions of a new devaluation of the yuan.

“European investor sentiment on the yuan hasn’t recovered since the devaluation,” said Tommy Ong, managing director for treasury and markets at DBS Group Holdings Ltd. in Hong Kong. The yuan will decline to 6.45 per dollar by the end of the year, a 1.8 percent drop from Tuesday’s level, according to the median estimate in a Bloomberg survey. Pacific Investment Management Co., which has $1.52 trillion in assets, said this month the currency is poised to weaken another 7 percent.