London ranked No 1 for offshore renminbi foreign exchange transactions during the first three months of 2017, according to the latest data released by a leading global financial network on Tuesday.

The Society for Worldwide Interbank Financial Telecommunication says 36.3 percent of global offshore renminbi exchange transactions were conducted through London. Hong Kong was in second place, with 29.3 percent. The United States and France both handled 7.3 percent.

Analysts said London’s history as a leading foreign exchange trading center, and the British government’s push to engage with China on trading activities, were key drivers for the performance.

“London is already the world’s preeminent hub for foreign exchange trading. More recently, the current UK government has been forced to look outside the European Union for business, this includes China and other emerging market economies," said Jan Dehn, head of research at London-based Ashmore Investment Management.

In recent years, the renminbi has increasingly been used as an invoicing currency for trading activities with China because overseas traders have been able to secure better trading margins with their Chinese counterparts. In addition, the value of British exports to China increased by 108 percent between 2010 and 2016.

The increased use of the renminbi for export invoicing has also prompted greater trading in the currency by big financial institutions looking to hedge currency risks for their clients, or to profit from speculative trades.

The SWIFT data also showed a steady increase in renminbi foreign exchange transactions during the last five years, with the number of renminbi-denominated transactions reaching more than 13 million in 2016, from 1.8 million in 2011.

Helena Huang, China economist at ICBC Standard Bank, said the growth of renminbi foreign exchange trading in London was a reflection of the growing acceptance of the renminbi among global public-sector investors, helped by the renminbi’s inclusion in the International Monetary Fund’s basket of special drawing rights last October.

Danae Kyriakopoulou, head of research at the think-tank OMFIF, said other factors behind the trend include China’s macroeconomic and exchange rate stability, firm growth, and the progress of Belt and Road Initiative projects.

Many Belt and Road projects are being financed with the renminbi, and many London-based banks have expressed a desire to finance those deals.

Despite its growth, renminbi trading in London only accounted for 2 percent of average daily turnover in London as of October, according to the latest Bank of England data.

“Looking ahead, there is plenty of headroom for renminbi foreign exchange trading to flourish in London as the yuan closes the gap with the other four SDR basket currencies," Huang said.

The SWIFT data also showed London to be the largest renminbi payment center outside China with a 5.66 percent share. However, it was far behind Hong Kong – the leading offshore hub of the currency – which had a 76.14 percent share. Singapore stands at No 3 with a share of 4.19 percent.