(Yicai Global) Feb. 25 -- The yuan was used in just 1.65 percent of global payments in January, down 29 basis points from the previous month, according to the latest data from the Society for Worldwide Interbank Financial Telecommunication.

The main reason for the decline was a fall in China's overseas trade and investment activity at the end of the month, Barclays Capital's analyst Michael Gapen told the 21st Century Business Herald. Late January marked the beginning of the Chinese New Year holiday and also when the public became aware of the COVID-19 outbreak, which meant many businesses suspended operations.

If economic activity returns to normal quickly, the yuan's role in international payments will soon recover to around 2 percent, Gapen added.

Several foreign trade companies in Jiangsu and Zhejiang provinces saw a more than 30 percent reduction in cross-border yuan-denominated trade settlement as they faced delays in delivering orders overseas, the 21st Century Business Herald report cited executives at the firms as saying.

"We expect the yuan's cross-border trading volume will still fall monthly in February as most upstream companies had not fully resumed production and operations by the start of the month," said a director at one joint-stock bank's cross-border business division, adding that this means the yuan's share of global payments will likely fall again this month.

Authorities in some regions have already been asking financial institutions to more efficiently help companies handle their cross-border yuan business so they can get back to work sooner, and this seems to have paid off. Cross-border yuan business in Shenzhen totaled nearly CNY41 billion (USD5.8 billion) in the first half of this month, up 13.5 percent annually, the report added.

Editor: James Boynton