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Inter-nation trade using yuan gets expansion
By Zhang Fengming |
June 23, 2010, Wednesday
|
Print Edition
Print Edition
CHINA yesterday widely expanded a trial program on yuan-denominated cross-border trade - the latest step toward making the country's currency an international one.
The program, started last July in Shanghai and four Guangdong Province cities, is spreading to 20 provinces and will cover trade with any country, the People's Bank of China said on its Website yesterday.
The newly added areas include Beijing and Jiangsu, Zhejiang, Fujian, Shandong and Sichuan provinces. The settlement will apply to trade in services, not just products, as before.
Up to now, the trial has been limited to 365 firms in Shanghai and four Guangdong cities, allowing them to use the renminbi to settle trade with counterparts in Hong Kong, Macau and the 10 countries in the Association of Southeast Asian Nations.
"The expansion is a not a threat for Shanghai, and it will create an economy of scale to attract more companies to join the program," said Fang Xinghai, head of the Shanghai Financial Service Office.
The central bank said banks and companies have steadily increased their demand to settle cross-border trade in yuan.
HSBC yesterday finished a cross-border yuan settlement in Qingdao, Shandong Province, its first transaction in the expanded program.
HSBS was not alone in welcoming the expansion.
Standard Chartered Bank has already launched road shows on the program in Hong Kong, South Korea, Japan, and the European cities of London, Frankfurt and Paris to allure more companies to join the program.
"With the yuan settlement, there are many opportunities presented to both importing and exporting companies to increase their sales, reduce costs and manage their risks," Neil Daswani, head of North Asia, Transaction Banking, Standard Chartered Bank, said yesterday.
Companies in China have to meet certain standards and gain approval to join the program. Authorities have said the trial eventually will be expanded nationwide.
The expansion came on the heels of China's weekend pledge to make the yuan more flexible.
The Chinese yuan declined to 6.8136 against the US dollar yesterday after a higher opening. The yuan reversed its strong gains on Monday, its first day under the looser policy, highlighting that its movement may be two-way.
The central bank set the central parity rate for yuan at 6.7980 yesterday by opening 0.43 percent stronger, the biggest gain in five years.
The yuan ended at a record high of 6.7976 against the US dollar on Monday in Shanghai. The currency is allowed to fluctuate in a 0.5 percent daily trading band.
The program, started last July in Shanghai and four Guangdong Province cities, is spreading to 20 provinces and will cover trade with any country, the People's Bank of China said on its Website yesterday.
The newly added areas include Beijing and Jiangsu, Zhejiang, Fujian, Shandong and Sichuan provinces. The settlement will apply to trade in services, not just products, as before.
Up to now, the trial has been limited to 365 firms in Shanghai and four Guangdong cities, allowing them to use the renminbi to settle trade with counterparts in Hong Kong, Macau and the 10 countries in the Association of Southeast Asian Nations.
"The expansion is a not a threat for Shanghai, and it will create an economy of scale to attract more companies to join the program," said Fang Xinghai, head of the Shanghai Financial Service Office.
The central bank said banks and companies have steadily increased their demand to settle cross-border trade in yuan.
HSBC yesterday finished a cross-border yuan settlement in Qingdao, Shandong Province, its first transaction in the expanded program.
HSBS was not alone in welcoming the expansion.
Standard Chartered Bank has already launched road shows on the program in Hong Kong, South Korea, Japan, and the European cities of London, Frankfurt and Paris to allure more companies to join the program.
"With the yuan settlement, there are many opportunities presented to both importing and exporting companies to increase their sales, reduce costs and manage their risks," Neil Daswani, head of North Asia, Transaction Banking, Standard Chartered Bank, said yesterday.
Companies in China have to meet certain standards and gain approval to join the program. Authorities have said the trial eventually will be expanded nationwide.
The expansion came on the heels of China's weekend pledge to make the yuan more flexible.
The Chinese yuan declined to 6.8136 against the US dollar yesterday after a higher opening. The yuan reversed its strong gains on Monday, its first day under the looser policy, highlighting that its movement may be two-way.
The central bank set the central parity rate for yuan at 6.7980 yesterday by opening 0.43 percent stronger, the biggest gain in five years.
The yuan ended at a record high of 6.7976 against the US dollar on Monday in Shanghai. The currency is allowed to fluctuate in a 0.5 percent daily trading band.
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