By Anjani Trivedi 

China suffered a second setback in as many weeks in its drive to boost the use of its currency abroad, even as the country steps up efforts to open up its capital account.

The use of the Chinese yuan as a currency for world payments fell two places to seventh in February, with a share of 1.81%, according to the Society for Worldwide Interbank Financial Telecommunication, or Swift, in a report Monday. That compares with a record-high 2.17% in December, according to the organization that is used by banks to coordinate international transactions.

The 20.4% drop compared with January is a reversal from November when the yuan broke into the top five of world payment currencies last year, overtaking the Canadian dollar and Australian dollar by value. Over the last two years, several new clearing centers for the yuan have emerged across the world as Beijing has promoted the tightly-controlled currency abroad.

"The global volume of payments in RMB will fluctuate, and is actually down by value compared with last month," Michael Moon, Head of Payments Asia-Pacific at Swift, said in a statement. "But the broader support by more countries beyond Hong Kong, underlining its international use, suggests the potential for future clearing centers and further development of the currency."

Swift attributed the decline to the seasonal effects of the Lunar New Year holiday earlier this year, but it follows an investor survey of 1,610 international companies by HSBC Holdings last week that showed overall use of the yuan by global companies had dropped five percentage points over the past year, hit by sharp moves in global foreign-exchange markets.

As China gears up to make its case for inclusion in the International Monetary Fund's special drawing rights, an international reserve asset that can supplement member countries' official reserves, authorities in recent weeks have pushed ahead with opening up access for foreign investors.

On March 27, the foreign-exchange regulator eased controls on foreign investments and granted Fidelity Investments Management (Hong Kong) Ltd. an investment quota of $1.2 billion. Previously, only sovereign-wealth funds and foreign central banks were allowed quotas above $1 billion. The investment program is one of the few ways for foreign investors to trade in China's domestically-listed, yuan-denominated A-shares, as well as bonds.

The inclusion of the yuan in the IMF's SDR would mark a major step in the currency's internationalization process, and Chinese authorities have publicly lobbied the fund. The eligibility depends on a country's share in world exports and whether its currency is freely usable. China has overtaken the U.S. in terms of share of world exports and is now the world's largest exporter, but the currency still remains tightly controlled, with the central bank setting a daily reference rate and a permitted trading range.

People's Bank of China Gov. Zhou Xiaochuan earlier this month said the government will accelerate its moves to open up the capital account and strive to complete the task this year.

Write to Anjani Trivedi at anjani.trivedi@wsj.com

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