The story appears on

Page A16

January 13, 2011

GET this page in PDF

Free for subscribers

View shopping cart

Related News

Home » Business » Economy

BOC's yuan trading offer to US clients signals wider use

THE Bank of China has offered yuan trading to its US customers, a sign that China this year may increasingly promote the use of its currency in major financial centers.

The change at BOC means that customers can trade the Chinese currency in the United States for the first time.

The New York branch of China's fourth-largest bank said it now lets companies and individuals buy and sell the yuan via accounts with its US branches, although US businesses and individuals can also trade the currency through Western banks.

"The authorities are promoting the use of the yuan in international trade, and this is another step in that direction, and this means we should see the growth of yuan trading in other regional centers across the world," said Robert Minikin, senior currency strategist at Standard Chartered Bank in Hong Kong.

The move is seen as another small step to redenominate trade in yuan after persuading Chinese mainland importers and exporters to reduce settling trade in the US dollar and striking trade settlement agreements with Russia, Brazil and other countries and regions.

Promoting the use of the yuan in international trade has gone from strength to strength in the past year thanks to a slew of measures taken by authorities.

Cross-border trade settlement in Hong Kong has grown rapidly from a monthly average 4 billion yuan (US$606 million) in the first half of 2010 to 68 billion yuan in October.

At the same time, Hong Kong's yuan deposit base has expanded sharply since trade liberalization rules established in July, leading to the emergence of a rapidly growing offshore yuan and yuan-linked instrument market.

The step by BOC, while significant, is a baby one, mainly because the Chinese government still tightly controls the amount of yuan circulating outside the country and maintains trade settlement quotas.

In 2010, China ran a US$181 billion bilateral surplus with the US, and a total surplus of US$183 billion.

BOC's website, which outlines details of holding yuan accounts, said it offers yuan savings, demand and time deposit accounts to business customers in New York and Los Angeles.

A savings account requires a minimum balance of the equivalent of US$5,000, while the minimum in demand deposit accounts is US$3,000.

The amount of US dollars that can be converted into yuan per individual account is a tiny 20,000 yuan per day - a cap similar to the one existing in Hong Kong - and means that the growth in the yuan deposit base would take time.




 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend