Posted by: changholt | February 21, 2011

China takes steps to promote international trade in Yuan

The Bank of China Ltd, a state-owned bank, has today offered Yuan trading to U.S. Clients, a move which promotes the idea that Beijing this year may increasingly enforce the use of the Chinese currency in major financial centers. This is the first time that trading of the Yuan has been enabled from the United States as in the past a trip to Hong Kong was required – indicating that in the near future we may expect to see the Yuan traded in international trade. The move is regarded by some as strategic timed further to the scheduled visit to Washington by Chinese president Hu Kintao in the middle of next week.

The trading, that can take place via the New York branch of one of China’s largest banks, is done via accounts through its US branches; more so individuals and US businesses may also trade the currency through Western banks. A savings account will require the account holder to place a minimum balance of roughly USD 5000, while a deposit account requires USD 3000.

The move is a part of many small steps with the aim to redenominated trade in the Yuan further to having persuaded importers and exporters to reduce settling trade in the US Dollar and striking trade settlement agreements with Russia, Brazil and a number of other countries. The recent efforts have seen positive results as the Yuan deposit base has been rapidly growing since last year’s summer trade liberalization rules which lead to the emergence of an offshore Yuan as well as a Yuan linked instrument market in Hong Kong.

The Yuan deposits have been increasing in Hong Kong with an increase of over 200 Billion Yuan between the periods of December 2009 – November 2010. This increase is expected to continue into the New Year as more and more trade is being settled in Yuan in other centers.

The recent steps taken by the Chinese will surely bolster trade settlement in Yuan, although it is still believed that the Chinese currency has a long way to go before it can reach the status of an alternative reserve currency as it is after all a currency that is ultimately controlled by Chinese policymakers under relatively strict control.

via China takes steps to promote international trade in Yuan | Forex News.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s


%d bloggers like this: